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Joint Determination of Optimal Inventory and Quality Control Policy

Author

Listed:
  • Michael H. Peters

    (Quantitative Business Analysis Department, College of Business Administration, Louisiana State University, Baton Rouge, Louisiana 70803)

  • Helmut Schneider

    (Quantitative Business Analysis Department, College of Business Administration, Louisiana State University, Baton Rouge, Louisiana 70803)

  • Kwei Tang

    (Quantitative Business Analysis Department, College of Business Administration, Louisiana State University, Baton Rouge, Louisiana 70803)

Abstract

Typically the operating policy for the inventory control system for a commodity is developed independent of the operating policy for the quality control system for that commodity and vice versa. In many circumstances, these systems are dependent on one another. A cost model that combines a fixed order quantity inventory control system with a Bayesian quality control system for a lot-by-lot attribute acceptance sampling plan is presented along with an algorithm to obtain the operating parameters for the combined systems. Behavior of the combined systems is investigated, and the costs and operating policy determined using this model are compared with the costs and operating policy determined when there is no integration of the two systems and when there is partial integration of the two systems. There are significant cost savings obtained by using the operating policy developed under the combined systems over the operating policy derived from the separate systems.

Suggested Citation

  • Michael H. Peters & Helmut Schneider & Kwei Tang, 1988. "Joint Determination of Optimal Inventory and Quality Control Policy," Management Science, INFORMS, vol. 34(8), pages 991-1004, August.
    • Handle: RePEc:inm:ormnsc:v:34:y:1988:i:8:p:991-1004
    DOI: 10.1287/mnsc.34.8.991
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    Citations

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    Cited by:

    1. Yimin Wang, 2013. "Specification vagueness and supply quality risk," Naval Research Logistics (NRL), John Wiley & Sons, vol. 60(3), pages 222-236, April.
    2. Ben-Daya, M. & Noman, S.M., 2008. "Integrated inventory and inspection policies for stochastic demand," European Journal of Operational Research, Elsevier, vol. 185(1), pages 159-169, February.
    3. Wright, CM & Mehrez, A, 1998. "An Overview of Representative Research of the Relationships Between Quality and Inventory," Omega, Elsevier, vol. 26(1), pages 29-47, February.
    4. A. Gürhan Kök & Kevin H. Shang, 2007. "Inspection and Replenishment Policies for Systems with Inventory Record Inaccuracy," Manufacturing & Service Operations Management, INFORMS, vol. 9(2), pages 185-205, February.
    5. Tang, Kwei & Gong, Linguo & Chang, Dong-Shang, 2003. "Optimal process control policies under a time-varying cost structure," European Journal of Operational Research, Elsevier, vol. 149(1), pages 197-210, August.
    6. Jinfa Chen & David D. Yao & Shaohui Zheng, 2001. "Optimal Replenishment and Rework with Multiple Unreliable Supply Sources," Operations Research, INFORMS, vol. 49(3), pages 430-443, June.
    7. Bouslah, Bassem & Gharbi, Ali & Pellerin, Robert, 2013. "Joint optimal lot sizing and production control policy in an unreliable and imperfect manufacturing system," International Journal of Production Economics, Elsevier, vol. 144(1), pages 143-156.

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