Managing quality improvement, setup cost and lead time reductions in a just-in-time integrated inventory model

Abstract

This article investigates a just-in-time integrated inventory model with quality improvement, setup cost and lead time reduction. The objective is to simultaneously optimise the order quantity, setup cost, process quality level, number of deliveries and lead time. A solution procedure is suggested for solving the proposed model and a numerical example is considered to illustrate the impact of setup cost reduction with capital investment. The current model predicts a lower total cost, order quantity and number of deliveries compared with Yang, J-S. and Pan, J.C-H. (2004) 'Just-in-time purchasing: an integrated inventory model involving deterministic variable lead time and quality improvement investment', Int. J. Production Research, Vol. 42, pp.853-863. An integrated inventory model is helpful in breaking down the traditional barriers as it results in lower total relevant cost compared to the independent inventory policies of both purchaser and vendor. These results can be used to promote cooperation and to minimise the total system cost of integrated enterprises.