Abstract
Optimization of a manufacturer-retailer integrated type of intra-supply chain system considering unreliable production facility is explored in this study. It is assumed that a producer of consumer goods has its own sales offices, and during the fabrication process, both equipment breakdown and production of nonconforming goods seem inevitable. To explicitly address such a real intra-supply chain problem, we incorporate end products transportation cost and sales office's stock holding cost into a prior study (Chiu [01]) with the objective of deriving the optimal fabrication runtime. Solution to the problem is obtained through the use of mathematical modeling, optimization techniques, and a proposed recursive algorithm. Applicability of research result and sensitivity analyses are demonstrated thru numerical example.
Highlights
This study investigates the optimal fabrication runtime for a manufacturer-retailer integrated intra-supply chain system with stochastic machine breakdown and the reworking of defective items
In the finishing point of rework process, end products are distributed to the sales office, under a discontinuous multi-shipment policy, whereas n fixed amount installments of the completed batch are delivered at a fixed interval of time during product delivery time of each replenishment cycle
This study explores the optimal fabrication runtime for an imperfect intra-supply chain system
Summary
This study investigates the optimal fabrication runtime for a manufacturer-retailer integrated intra-supply chain system with stochastic machine breakdown and the reworking of defective items. Assumption of EPQ model [02] is simplified, it includes (i) a continuous inventory issuing policy of end products, (ii) all products made are of perfect quality, and (iii) the manufacturing equipment is always in perfect operating condition during a production run. In the existing supply chain environments, the assumption of a continuous issuing policy of end products is somewhat impractical because of the enormous transportation costs incurred. Goyal [05] proposed a vendor-buyer integrated supply-chain system. Banerjee and Banerjee [07] used an electronic data interchange (EDI) approach to explore a one-vendor multi-buyer inventory system under the policy of rotation fabrication cycle length. The result indicated that the vendor managed inventory (VMI) case can help improve service level and cut down costs for both parties in the system. Additional studies [09-17] explored diverse aspects of supply-chain management
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