IDEAS home Printed from https://ideas.repec.org/a/pal/jorsoc/v56y2005i5d10.1057_palgrave.jors.2601840.html
   My bibliography  Save this article

Exact formulation of stochastic EMQ model for an unreliable production system

Author

Listed:
  • B C Giri

    (Hiroshima University)

  • T Dohi

    (Hiroshima University)

Abstract

The purpose of this paper is to present an exact formulation of stochastic EMQ model for an unreliable production system under a general framework in which the time to machine failure, corrective (emergency) and preventive (regular) repair times are assumed to be random variables. For exact financial implications of the lot-sizing decisions, the EMQ model is formulated based on the net present value (NPV) approach. Then, by taking limitation on the discount rate, the traditional long-run average cost model is obtained. The criteria for the existence and uniqueness of the optimal production time in both the models are derived under general failure and specific repair time distributions. Numerical examples are devoted to find the optimal production policies of the developed models and examine the sensitivity of the parameters involved. Computational results show that the optimal decision based on the NPV approach is superior to that based on the long-run average cost approach, though the performance level strongly depends on the pertinent failure and repair time distributions.

Suggested Citation

  • 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.
    • Handle: RePEc:pal:jorsoc:v:56:y:2005:i:5:d:10.1057_palgrave.jors.2601840
    DOI: 10.1057/palgrave.jors.2601840
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/palgrave.jors.2601840
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/palgrave.jors.2601840?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    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. T. Bielecki & P. R. Kumar, 1988. "Optimality of Zero-Inventory Policies for Unreliable Manufacturing Systems," Operations Research, INFORMS, vol. 36(4), pages 532-541, August.
    3. Jaber, Mohamad Y. & Bonney, Maurice, 2001. "Economic lot sizing with learning and continuous time discounting: Is it significant?," International Journal of Production Economics, Elsevier, vol. 71(1-3), pages 135-143, May.
    4. M. Berg & M. J. M. Posner & H. Zhao, 1994. "Production-Inventory Systems with Unreliable Machines," Operations Research, INFORMS, vol. 42(1), pages 111-118, February.
    5. Ram Rachamadugu, 1988. "Error bounds for EOQ," Naval Research Logistics (NRL), John Wiley & Sons, vol. 35(5), pages 419-425, October.
    6. John J. McCall, 1965. "Maintenance Policies for Stochastically Failing Equipment: A Survey," Management Science, INFORMS, vol. 11(5), pages 493-524, March.
    7. Chao, Hung-po, 1992. "The EQQ model with stochastic demand and discounting," European Journal of Operational Research, Elsevier, vol. 59(3), pages 434-443, June.
    8. Evan L. Porteus, 1986. "Optimal Lot Sizing, Process Quality Improvement and Setup Cost Reduction," Operations Research, INFORMS, vol. 34(1), pages 137-144, February.
    9. Dohi, Tadashi & Okamura, Hiroyuki & Osaki, Shunji, 2001. "Optimal control of preventive maintenance schedule and safety stocks in an unreliable manufacturing environment," International Journal of Production Economics, Elsevier, vol. 74(1-3), pages 147-155, December.
    10. Hau L. Lee & Meir J. Rosenblatt, 1987. "Simultaneous Determination of Production Cycle and Inspection Schedules in a Production System," Management Science, INFORMS, vol. 33(9), pages 1125-1136, September.
    11. Daning Sun & Maurice Queyranne, 2002. "Production and Inventory Model Using Net Present Value," Operations Research, INFORMS, vol. 50(3), pages 528-537, June.
    12. G. Hadley, 1964. "A Comparison of Order Quantities Computed Using the Average Annual Cost and the Discounted Cost," Management Science, INFORMS, vol. 10(3), pages 472-476, April.
    13. Klein Haneveld, Willem K. & Teunter, Ruud H., 1998. "Effects of discounting and demand rate variability on the EOQ," International Journal of Production Economics, Elsevier, vol. 54(2), pages 173-192, January.
    14. Kim, Chang Hyun & Hong, Yushin, 1997. "An extended EMQ model for a failure prone machine with general lifetime distribution," International Journal of Production Economics, Elsevier, vol. 49(3), pages 215-223, May.
    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. Jeang, Angus, 2012. "Simultaneous determination of production lot size and process parameters under process deterioration and process breakdown," Omega, Elsevier, vol. 40(6), pages 774-781.
    2. Chiu, Singa Wang & Chou, Chung-Li & Wu, Wen-Kuei, 2013. "Optimizing replenishment policy in an EPQ-based inventory model with nonconforming items and breakdown," Economic Modelling, Elsevier, vol. 35(C), pages 330-337.
    3. Shaktipada Bhuniya & Biswajit Sarkar & Sarla Pareek, 2019. "Multi-Product Production System with the Reduced Failure Rate and the Optimum Energy Consumption under Variable Demand," Mathematics, MDPI, vol. 7(5), pages 1-20, May.
    4. Mitali Sarkar & Biswajit Sarkar, 2019. "Optimization of Safety Stock under Controllable Production Rate and Energy Consumption in an Automated Smart Production Management," Energies, MDPI, vol. 12(11), pages 1-16, May.
    5. Priyanka & Sarla Pareek, 2023. "A sustainable inventory model for stochastic demand using innovative multi-item production system with reduced failure rate," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 14(3), pages 844-864, June.
    6. Harun Öztürk, 2019. "Modeling an inventory problem with random supply, inspection and machine breakdown," OPSEARCH, Springer;Operational Research Society of India, vol. 56(2), pages 497-527, June.
    7. Om Prakash & A.R. Roy & A. Goswami, 2014. "Stochastic manufacturing system with process deterioration and machine breakdown," International Journal of Systems Science, Taylor & Francis Journals, vol. 45(12), pages 2539-2551, December.
    8. Chakraborty, Tulika & Giri, B.C. & Chaudhuri, K.S., 2009. "Production lot sizing with process deterioration and machine breakdown under inspection schedule," Omega, Elsevier, vol. 37(2), pages 257-271, April.
    9. Mitali Sarkar & Biswajit Sarkar & Muhammad Waqas Iqbal, 2018. "Effect of Energy and Failure Rate in a Multi-Item Smart Production System," Energies, MDPI, vol. 11(11), pages 1-21, October.
    10. Maddah, Bacel & Yassine, Ali A. & Salameh, Moueen K. & Chatila, Lama, 2014. "Reserve stock models: Deterioration and preventive replenishment," European Journal of Operational Research, Elsevier, vol. 232(1), pages 64-71.
    11. Chakraborty, Tulika & Giri, B.C. & Chaudhuri, K.S., 2008. "Production lot sizing with process deterioration and machine breakdown," European Journal of Operational Research, Elsevier, vol. 185(2), pages 606-618, March.

    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. Giri, B. C. & Dohi, T., 2004. "Optimal lot sizing for an unreliable production system based on net present value approach," International Journal of Production Economics, Elsevier, vol. 92(2), pages 157-167, November.
    2. Om Prakash & A.R. Roy & A. Goswami, 2014. "Stochastic manufacturing system with process deterioration and machine breakdown," International Journal of Systems Science, Taylor & Francis Journals, vol. 45(12), pages 2539-2551, December.
    3. Chakraborty, Tulika & Giri, B.C. & Chaudhuri, K.S., 2008. "Production lot sizing with process deterioration and machine breakdown," European Journal of Operational Research, Elsevier, vol. 185(2), pages 606-618, March.
    4. Harun Öztürk, 2021. "Optimal production run time for an imperfect production inventory system with rework, random breakdowns and inspection costs," Operational Research, Springer, vol. 21(1), pages 167-204, March.
    5. 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.
    6. 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.
    7. Peymankar, Mahboobe & Dehghanian, Farzad & Ghiami, Yousef & Abolbashari, Mohammad Hassan, 2018. "The effects of contractual agreements on the economic production quantity model with machine breakdown," International Journal of Production Economics, Elsevier, vol. 201(C), pages 203-215.
    8. Farvid, Mojtaba & Rosling, Kaj, 2014. "The discounted (R,Q) inventory model—The Shrewd Accountant's Heuristic," International Journal of Production Economics, Elsevier, vol. 149(C), pages 17-27.
    9. Jeang, Angus, 2012. "Simultaneous determination of production lot size and process parameters under process deterioration and process breakdown," Omega, Elsevier, vol. 40(6), pages 774-781.
    10. Hsieh, Tsu-Pang & Dye, Chung-Yuan & Ouyang, Liang-Yuh, 2008. "Determining optimal lot size for a two-warehouse system with deterioration and shortages using net present value," European Journal of Operational Research, Elsevier, vol. 191(1), pages 182-192, November.
    11. Bendavid, Illana & Herer, Yale T., 2009. "Economic optimization of off-line inspection in a process that also produces non-conforming units when in control and conforming units when out of control," European Journal of Operational Research, Elsevier, vol. 195(1), pages 139-155, May.
    12. Yeh, Ruey Huei & Ho, Wen-Tsung & Tseng, Sheng-Tsaing, 2000. "Optimal production run length for products sold with warranty," European Journal of Operational Research, Elsevier, vol. 120(3), pages 575-582, February.
    13. 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.
    14. Stephen M. Gilbert & Hena M Bar, 1999. "The value of observing the condition of a deteriorating machine," Naval Research Logistics (NRL), John Wiley & Sons, vol. 46(7), pages 790-808, October.
    15. 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.
    16. Giri, B. C. & Yun, W. Y. & Dohi, T., 2005. "Optimal design of unreliable production-inventory systems with variable production rate," European Journal of Operational Research, Elsevier, vol. 162(2), pages 372-386, April.
    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. 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.
    19. Hyun Kim, Chang & Hong, Yushin, 1999. "An optimal production run length in deteriorating production processes," International Journal of Production Economics, Elsevier, vol. 58(2), pages 183-189, January.
    20. Dhouib, K. & Gharbi, A. & Ben Aziza, M.N., 2012. "Joint optimal production control/preventive maintenance policy for imperfect process manufacturing cell," International Journal of Production Economics, Elsevier, vol. 137(1), pages 126-136.

    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:pal:jorsoc:v:56:y:2005:i:5:d:10.1057_palgrave.jors.2601840. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    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.