IDEAS home Printed from https://ideas.repec.org/a/inm/oropre/v48y2000i5p761-767.html
   My bibliography  Save this article

Manufacturing to Order with Random Yield and Costly Inspection

Author

Listed:
  • Abraham Grosfeld-Nir

    (Faculty of Management, Tel-Aviv University, Tel Aviv, Israel, 69978)

  • Yigal Gerchak

    (Department of Management Sciences, University of Waterloo, Ontario, Canada N2L 3G1)

  • Qi-Ming He

    (Department of Industrial Engineering, DalTech, Nova Scotia, Canada B3J 2X4)

Abstract

This study considers a situation where a contractor receives an order that it commits to satisfy in full. The fulfillment of the contract requires manufacturing and inspection. Because the number of defective units within a produced lot is not known in advance, it is possible that after examining the lot, it is learned that the number of conforming units is short of the demand. If so, further manufacturing and inspection are required. Once enough conforming units are found, the inspection terminates, and the remaining uninspected units, as well as all defectives, are scrapped.Whereas previous “multiple production runs” studies implicitly assumed that inspection costs are negligible, we include these costs as a key part of the problem. It turns out that the optimal production lot size depends on the inspection cost. Our model is very general: We provide a framework to calculate the optimal batch and the expected number of inspections for any yield pattern, as well as for any inspection procedure. We also provide results and numerical examples concerning specific yield patterns that are common in practice.

Suggested Citation

  • Abraham Grosfeld-Nir & Yigal Gerchak & Qi-Ming He, 2000. "Manufacturing to Order with Random Yield and Costly Inspection," Operations Research, INFORMS, vol. 48(5), pages 761-767, October.
  • Handle: RePEc:inm:oropre:v:48:y:2000:i:5:p:761-767
    DOI: 10.1287/opre.48.5.761.12406
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/opre.48.5.761.12406
    Download Restriction: no

    File URL: https://libkey.io/10.1287/opre.48.5.761.12406?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Evan L. Porteus, 1990. "Note---The Impact of Inspection Delay on Process and Inspection Lot Sizing," Management Science, INFORMS, vol. 36(8), pages 999-1007, August.
    2. Evan L. Porteus & Alexandar Angelus, 1997. "Opportunities for Improved Statistical Process Control," Management Science, INFORMS, vol. 43(9), pages 1214-1228, September.
    3. Candace Arai Yano & Hau L. Lee, 1995. "Lot Sizing with Random Yields: A Review," Operations Research, INFORMS, vol. 43(2), pages 311-334, April.
    4. Evan L. Porteus, 1986. "Optimal Lot Sizing, Process Quality Improvement and Setup Cost Reduction," Operations Research, INFORMS, vol. 34(1), pages 137-144, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abdel-Malek, Layek & Montanari, Roberto & Meneghetti, Diego, 2008. "The capacitated newsboy problem with random yield: The Gardener Problem," International Journal of Production Economics, Elsevier, vol. 115(1), pages 113-127, September.
    2. Muhammad Babar Ramzan & Shehreyar Mohsin Qureshi & Sonia Irshad Mari & Muhammad Saad Memon & Mandeep Mittal & Muhammad Imran & Muhammad Waqas Iqbal, 2019. "Effect of Time-Varying Factors on Optimal Combination of Quality Inspectors for Offline Inspection Station," Mathematics, MDPI, vol. 7(1), pages 1-18, January.
    3. Kulkarni, Shailesh S., 2008. "Loss-based quality costs and inventory planning: General models and insights," European Journal of Operational Research, Elsevier, vol. 188(2), pages 428-449, July.
    4. Qing Li & Shaohui Zheng, 2006. "Joint Inventory Replenishment and Pricing Control for Systems with Uncertain Yield and Demand," Operations Research, INFORMS, vol. 54(4), pages 696-705, August.
    5. Zare, Marjan & Esmaeili, Maryam & He, Yuanjie, 2019. "Implications of risk-sharing strategies on supply chains with multiple retailers and under random yield," International Journal of Production Economics, Elsevier, vol. 216(C), pages 413-424.
    6. Xie, Gang & Yue, Wuyi & Wang, Shouyang & Lai, Kin Keung, 2011. "Quality investment and price decision in a risk-averse supply chain," European Journal of Operational Research, Elsevier, vol. 214(2), pages 403-410, October.
    7. Choi, Sungyong & Jeon, Sumin & Kim, Jinmin & Park, Kwangtae, 2019. "A newsvendor analysis of a binomial yield production process," European Journal of Operational Research, Elsevier, vol. 273(3), pages 983-991.
    8. Shoshana Anily & Abraham Grosfeld-Nir, 2006. "An Optimal Lot-Sizing and Offline Inspection Policy in the Case of Nonrigid Demand," Operations Research, INFORMS, vol. 54(2), pages 311-323, April.
    9. Wen-Ya Wang & Diwakar Gupta, 2014. "Nurse Absenteeism and Staffing Strategies for Hospital Inpatient Units," Manufacturing & Service Operations Management, INFORMS, vol. 16(3), pages 439-454, July.
    10. Xu, He, 2010. "Managing production and procurement through option contracts in supply chains with random yield," International Journal of Production Economics, Elsevier, vol. 126(2), pages 306-313, August.
    11. Kutzner, Sarah C. & Kiesmüller, Gudrun P., 2013. "Optimal control of an inventory-production system with state-dependent random yield," European Journal of Operational Research, Elsevier, vol. 227(3), pages 444-452.
    12. Mart, Turgut & Duran, Serhan & Bakal, İsmail Serdar, 2013. "Tactical inventory and backorder decisions for systems with predictable production yield," International Journal of Production Economics, Elsevier, vol. 143(2), pages 294-303.
    13. D. K. Choudhury, 2020. "Modelling of Materials Management System for Cross-country Pipeline Project from Client’s Perspective," Metamorphosis: A Journal of Management Research, , vol. 19(2), pages 106-120, December.
    14. Abraham Grosfeld‐Nir & Eyal Cohen & Yigal Gerchak, 2007. "Production to order and off‐line inspection when the production process is partially observable," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(8), pages 845-858, December.
    15. Kaijie Zhu & Rachel Q. Zhang & Fugee Tsung, 2007. "Pushing Quality Improvement Along Supply Chains," Management Science, INFORMS, vol. 53(3), pages 421-436, March.
    16. Shaofu Du & Yujiao Zhu & Tengfei Nie & Haisuo Yu, 2018. "Loss-averse preferences in a two-echelon supply chain with yield risk and demand uncertainty," Operational Research, Springer, vol. 18(2), pages 361-388, July.
    17. Chongfeng Lan & Zhongzhen Miao & Huanyong Ji, 2021. "Strategic Analysis of Dual-Channel Green Supply Chain with an Unreliable and Competitive Supplier," Sustainability, MDPI, vol. 13(10), pages 1-22, May.
    18. Wu, Meng & Zhu, Stuart X. & Teunter, Ruud H., 2013. "The risk-averse newsvendor problem with random capacity," European Journal of Operational Research, Elsevier, vol. 231(2), pages 328-336.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Abraham Grosfeld‐Nir & Eyal Cohen & Yigal Gerchak, 2007. "Production to order and off‐line inspection when the production process is partially observable," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(8), pages 845-858, December.
    2. Kazaz, Burak & Sloan, Thomas W., 2013. "The impact of process deterioration on production and maintenance policies," European Journal of Operational Research, Elsevier, vol. 227(1), pages 88-100.
    3. Shoshana Anily & Avraham Beja & Amit Mendel, 2002. "Optimal Lot Sizes with Geometric Production Yield and Rigid Demand," Operations Research, INFORMS, vol. 50(3), pages 424-432, June.
    4. Kulkarni, Shailesh S., 2008. "Loss-based quality costs and inventory planning: General models and insights," European Journal of Operational Research, Elsevier, vol. 188(2), pages 428-449, July.
    5. Guu, Sy-Ming & Zhang, Alex X., 2003. "The finite multiple lot sizing problem with interrupted geometric yield and holding costs," European Journal of Operational Research, Elsevier, vol. 145(3), pages 635-644, March.
    6. Sy-Ming Guu & Chun-Yi Lin, 2018. "The multiple lot sizing problem of a serial production system with interrupted geometric yields, rigid demand and Pentico’s heuristic," Annals of Operations Research, Springer, vol. 269(1), pages 167-183, October.
    7. T W Sloan, 2004. "A periodic review production and maintenance model with random demand, deteriorating equipment, and binomial yield," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(6), pages 647-656, June.
    8. Shoshana Anily & Abraham Grosfeld-Nir, 2006. "An Optimal Lot-Sizing and Offline Inspection Policy in the Case of Nonrigid Demand," Operations Research, INFORMS, vol. 54(2), pages 311-323, April.
    9. 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.
    10. Kaijie Zhu & Rachel Q. Zhang & Fugee Tsung, 2007. "Pushing Quality Improvement Along Supply Chains," Management Science, INFORMS, vol. 53(3), pages 421-436, March.
    11. Tien-Yu Lin & Kuo-Lung Hou, 2015. "An imperfect quality economic order quantity with advanced receiving," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 23(2), pages 535-551, July.
    12. Yoo, Seung Ho & Kim, DaeSoo & Park, Myung-Sub, 2009. "Economic production quantity model with imperfect-quality items, two-way imperfect inspection and sales return," International Journal of Production Economics, Elsevier, vol. 121(1), pages 255-265, September.
    13. B C Giri & T Dohi, 2005. "Exact formulation of stochastic EMQ model for an unreliable production system," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(5), pages 563-575, May.
    14. Nasr, Walid W. & Maddah, Bacel & Salameh, Moueen K., 2013. "EOQ with a correlated binomial supply," International Journal of Production Economics, Elsevier, vol. 144(1), pages 248-255.
    15. S. Andrew Starbird, 1997. "Acceptance sampling, imperfect production, and the optimality of zero defects," Naval Research Logistics (NRL), John Wiley & Sons, vol. 44(6), pages 515-530, September.
    16. Liu, Xingchu & Cetinkaya, Sila, 2007. "A note on "quality improvement and setup reduction in the joint economic lot size model"," European Journal of Operational Research, Elsevier, vol. 182(1), pages 194-204, October.
    17. W. C. Tsai & Neng-Hui Shih & Chih-Hsiung Wang, 2018. "The effects of inspection delay and restoration cost on the optimal inspection and production policy," OPSEARCH, Springer;Operational Research Society of India, vol. 55(1), pages 187-195, March.
    18. Khan, Mehmood & Jaber, Mohamad Y. & Bonney, Maurice, 2011. "An economic order quantity (EOQ) for items with imperfect quality and inspection errors," International Journal of Production Economics, Elsevier, vol. 133(1), pages 113-118, September.
    19. Vickson, Raymond G. & Hassini, Elkafi, 2006. "Lot streaming for quality control in two-stage batch production," European Journal of Operational Research, Elsevier, vol. 170(3), pages 824-843, May.
    20. Freimer, Michael & Thomas, Douglas & Tyworth, John, 2006. "The value of setup cost reduction and process improvement for the economic production quantity model with defects," European Journal of Operational Research, Elsevier, vol. 173(1), pages 241-251, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:oropre:v:48:y:2000:i:5:p:761-767. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.