Abstract
Article history: Received October 26 2013 Received in Revised Format July 5 2014 Accepted July 5 2014 Available online July 7 2014 In this study, we develop a three echelon supply chain model for items to determine the optimal reliability and production rate, which achieves the biggest total integrated profit for an imperfect manufacturing process. Here, we have taken a supplier, a manufacturer and a retailer in which supplier supplies raw materials to manufacturer, manufacturer produces perfect and imperfect quality items because practically it happens and manufacturer supplies perfect quality items to the retailers. In production system, production facility may shift from an in-control state to an out-ofcontrol state at any random time. The basic assumption of classical economic manufacturing quantity model is that all manufacturing items are of perfect quality but the assumption is not true in practice. The proposed study is formulated assuming that a certain percent of total product is defective. This percentage also varies with production rate and production run time. The defective items are restored in original quality by reworked at some costs to maintain the quality of products in a competitive market. Finally, numerical example and its graphical representation are given to illustrate the proposed model. Sensitivity analysis is also provided to test feasibility of the model. © 2014 Growing Science Ltd. All rights reserved
Highlights
The production or the distribution of inventories is an activity in which almost all organizations are involved
Salameh and Jaber (2000) developed an extended economic order quantity (EOQ) model where imperfect quality items are salvaged at a discounted price
Cardenas-Barron (2009) developed an economic production quantity (EPQ) model with planned backorders for determining the production lot size and the size of backorders in an imperfect production process where all defective items were reworked at the same cycle
Summary
The production or the distribution of inventories is an activity in which almost all organizations are involved. The above surveyed works assumed imperfect production processes that generate defects that are either reworked or scrapped Unlike these works, Salameh and Jaber (2000) developed an extended EOQ model where imperfect quality items are salvaged at a discounted price. The elapsed time for the production process shift to imperfect production is assumed to be exponential distribution have modelled an Economic Production Lot size model for imperfect items in which production rate is considered as fixed quantity and the demand rate is probabilistic under certain budget and shortage constraints. Cardenas-Barron (2009) developed an EPQ model with planned backorders for determining the production lot size and the size of backorders in an imperfect production process where all defective items were reworked at the same cycle. The integrated expected average profit and its difference with the total expected average profit by Stakelberg approach is calculated and a numerical example is considered to test which one is latter
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