A production - Inventory model with JIT setup cost incorporating inflation and time value of money in an imperfect production process

Abstract

A production inventory model with Just-In-Time (JIT) set-up cost has been developed in which inflation and time value of money are considered under an imperfect production process. The demand rate is considered to be a function of advertisement cost and selling price. Unit production cost is considered incorporating several features like energy and labour cost, raw material cost and development cost of the manufacturing system. Development cost is assumed to be a function of reliability parameter. Considering these phenomena, an analytic expression is obtained for the total profit of the model. The model provides an analytical solution to maximize the total profit function.A numerical example is presented to illustrate the model along with graphical analysis. Sensitivity analysis has been carried out to identify the most sensitive parameters of the model.