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Setup cost reduction in (Q, r) policy with lot size, setup time and lead-time interactions

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  • M A Hariga

    (King Saud University)

Abstract

It is often assumed in most deterministic and stochastic inventory models that lead-time is a given parameter and the optimal operating policy is determined on the basis of this unrealistic assumption. However, the manufacturing lead-time is made up of several components (moving time, waiting time, setup time, lot size, and rework time) most of which should be treated as controllable variables. In this paper the effect of setup cost reduction is addressed in a stochastic continuous review inventory system with lead-time depending on lot size and setup time. An efficient iterative procedure is developed to determine the near optimal lot size, reorder point and setup time. Furthermore, a sensitivity analysis is carried out to assess the cost savings that can be realised by investing in setup.

Suggested Citation

  • M A Hariga, 2000. "Setup cost reduction in (Q, r) policy with lot size, setup time and lead-time interactions," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 51(11), pages 1340-1345, November.
    • Handle: RePEc:pal:jorsoc:v:51:y:2000:i:11:d:10.1057_palgrave.jors.2601017
    DOI: 10.1057/palgrave.jors.2601017
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    Citations

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    Cited by:

    1. Pan, Jason Chao-Hsien & Lo, Ming-Cheng & Hsiao, Yu-Cheng, 2004. "Optimal reorder point inventory models with variable lead time and backorder discount considerations," European Journal of Operational Research, Elsevier, vol. 158(2), pages 488-505, October.
    2. Vaughan, Timothy S., 2006. "Lot size effects on process lead time, lead time demand, and safety stock," International Journal of Production Economics, Elsevier, vol. 100(1), pages 1-9, March.
    3. Lee, Jun-Yeon & Schwarz, Leroy B., 2007. "Leadtime reduction in a (Q,r) inventory system: An agency perspective," International Journal of Production Economics, Elsevier, vol. 105(1), pages 204-212, January.
    4. Hsiao, Yu-Cheng, 2008. "Integrated logistic and inventory model for a two-stage supply chain controlled by the reorder and shipping points with sharing information," International Journal of Production Economics, Elsevier, vol. 115(1), pages 229-235, September.
    5. Davide Castellano & Mosè Gallo & Liberatina C. Santillo, 2021. "A periodic review policy for a coordinated single vendor-multiple buyers supply chain with controllable lead time and distribution-free approach," 4OR, Springer, vol. 19(3), pages 347-388, September.
    6. Sumon Sarkar & Bibhas C. Giri, 2022. "Safety stock management in a supply chain model with waiting time and price discount dependent backlogging rate in stochastic environment," Operational Research, Springer, vol. 22(2), pages 917-946, April.

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