IDEAS home Printed from https://ideas.repec.org/a/taf/tsysxx/v47y2016i5p1142-1154.html
   My bibliography  Save this article

Economic lot sizing in a production system with random demand

Author

Listed:
  • Shine-Der Lee
  • Chin-Ming Yang
  • Shu-Chuan Lan

Abstract

An extended economic production quantity model that copes with random demand is developed in this paper. A unique feature of the proposed study is the consideration of transient shortage during the production stage, which has not been explicitly analysed in existing literature. The considered costs include set-up cost for the batch production, inventory carrying cost during the production and depletion stages in one replenishment cycle, and shortage cost when demand cannot be satisfied from the shop floor immediately. Based on renewal reward process, a per-unit-time expected cost model is developed and analysed. Under some mild condition, it can be shown that the approximate cost function is convex. Computational experiments have demonstrated that the average reduction in total cost is significant when the proposed lot sizing policy is compared with those with deterministic demand.

Suggested Citation

  • Shine-Der Lee & Chin-Ming Yang & Shu-Chuan Lan, 2016. "Economic lot sizing in a production system with random demand," International Journal of Systems Science, Taylor & Francis Journals, vol. 47(5), pages 1142-1154, April.
    • Handle: RePEc:taf:tsysxx:v:47:y:2016:i:5:p:1142-1154
    DOI: 10.1080/00207721.2014.915354
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00207721.2014.915354
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00207721.2014.915354?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. Pentico, David W. & Drake, Matthew J. & Toews, Carl, 2009. "The deterministic EPQ with partial backordering: A new approach," Omega, Elsevier, vol. 37(3), pages 624-636, June.
    2. Lee, S. D. & Rung, J. M., 2000. "Production lot sizing in failure prone two-stage serial systems," European Journal of Operational Research, Elsevier, vol. 123(1), pages 42-60, May.
    3. Eroglu, Abdullah & Ozdemir, Gultekin, 2007. "An economic order quantity model with defective items and shortages," International Journal of Production Economics, Elsevier, vol. 106(2), pages 544-549, April.
    4. Ben-Daya, M. & Hariga, M., 2004. "Integrated single vendor single buyer model with stochastic demand and variable lead time," International Journal of Production Economics, Elsevier, vol. 92(1), pages 75-80, November.
    5. Goyal, Suresh Kumar & Cardenas-Barron, Leopoldo Eduardo, 2002. "Note on: Economic production quantity model for items with imperfect quality - a practical approach," International Journal of Production Economics, Elsevier, vol. 77(1), pages 85-87, May.
    6. Stanley Gershwin & Bariş Tan & Michael Veatch, 2009. "Production control with backlog-dependent demand," IISE Transactions, Taylor & Francis Journals, vol. 41(6), pages 511-523.
    7. Hariga, Moncer A. & Benkherouf, Lakdere, 1994. "Optimal and heuristic inventory replenishment models for deteriorating items with exponential time-varying demand," European Journal of Operational Research, Elsevier, vol. 79(1), pages 123-137, November.
    8. Chiu, Singa Wang & Wang, Shan-Ling & Chiu, Yuan-Shyi Peter, 2007. "Determining the optimal run time for EPQ model with scrap, rework, and stochastic breakdowns," European Journal of Operational Research, Elsevier, vol. 180(2), pages 664-676, July.
    9. Lee, Shine-Der & Lan, Shu-Chuan, 2013. "Production lot sizing with a secondary outsourcing facility," International Journal of Production Economics, Elsevier, vol. 141(1), pages 414-424.
    10. Jaber, M.Y. & Goyal, S.K. & Imran, M., 2008. "Economic production quantity model for items with imperfect quality subject to learning effects," International Journal of Production Economics, Elsevier, vol. 115(1), pages 143-150, September.
    11. Cardenas-Barron, Leopoldo Eduardo, 2001. "The economic production quantity (EPQ) with shortage derived algebraically," International Journal of Production Economics, Elsevier, vol. 70(3), pages 289-292, April.
    12. Salameh, M. K. & Jaber, M. Y., 2000. "Economic production quantity model for items with imperfect quality," International Journal of Production Economics, Elsevier, vol. 64(1-3), pages 59-64, March.
    Full references (including those not matched with items on IDEAS)

    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. Mehmood Khan & Matloub Hussain & Leopoldo Eduardo Cárdenas-Barrón, 2017. "Learning and screening errors in an EPQ inventory model for supply chains with stochastic lead time demands," International Journal of Production Research, Taylor & Francis Journals, vol. 55(16), pages 4816-4832, August.
    2. Chang, Hung-Chi & Ho, Chia-Huei, 2010. "Exact closed-form solutions for "optimal inventory model for items with imperfect quality and shortage backordering"," Omega, Elsevier, vol. 38(3-4), pages 233-237, June.
    3. 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.
    4. Kevin Hsu, Wen-Kai & Yu, Hong-Fwu, 2009. "EOQ model for imperfective items under a one-time-only discount," Omega, Elsevier, vol. 37(5), pages 1018-1026, October.
    5. Taleizadeh, Ata Allah & Khanbaglo, Mahboobeh Perak Sari & Cárdenas-Barrón, Leopoldo Eduardo, 2016. "An EOQ inventory model with partial backordering and reparation of imperfect products," International Journal of Production Economics, Elsevier, vol. 182(C), pages 418-434.
    6. Khan, M. & Jaber, M.Y. & Wahab, M.I.M., 2010. "Economic order quantity model for items with imperfect quality with learning in inspection," International Journal of Production Economics, Elsevier, vol. 124(1), pages 87-96, March.
    7. Sana, Shib Sankar, 2010. "An economic production lot size model in an imperfect production system," European Journal of Operational Research, Elsevier, vol. 201(1), pages 158-170, February.
    8. Skouri, K. & Konstantaras, I. & Lagodimos, A.G. & Papachristos, S., 2014. "An EOQ model with backorders and rejection of defective supply batches," International Journal of Production Economics, Elsevier, vol. 155(C), pages 148-154.
    9. Khan, M. & Jaber, M.Y. & Guiffrida, A.L. & Zolfaghari, S., 2011. "A review of the extensions of a modified EOQ model for imperfect quality items," International Journal of Production Economics, Elsevier, vol. 132(1), pages 1-12, July.
    10. Hsu, Jia-Tzer & Hsu, Lie-Fern, 2013. "An EOQ model with imperfect quality items, inspection errors, shortage backordering, and sales returns," International Journal of Production Economics, Elsevier, vol. 143(1), pages 162-170.
    11. Sher, Mikhail M. & Kim, Seung-Lae & Banerjee, Avijit & Paz, Michael T., 2018. "A supply chain coordination mechanism for common items subject to failure in the electronics, defense, and medical industries," International Journal of Production Economics, Elsevier, vol. 203(C), pages 164-173.
    12. Alamri, Adel A. & Syntetos, Aris A., 2018. "Beyond LIFO and FIFO: Exploring an Allocation-In-Fraction-Out (AIFO) policy in a two-warehouse inventory model," International Journal of Production Economics, Elsevier, vol. 206(C), pages 33-45.
    13. Taleizadeh, Ata Allah & Cárdenas-Barrón, Leopoldo Eduardo & Mohammadi, Babak, 2014. "A deterministic multi product single machine EPQ model with backordering, scraped products, rework and interruption in manufacturing process," International Journal of Production Economics, Elsevier, vol. 150(C), pages 9-27.
    14. Tapan Kumar Datta, 2017. "Inventory system with defective products and investment opportunity for reducing defective proportion," Operational Research, Springer, vol. 17(1), pages 297-312, April.
    15. 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.
    16. Ivan Darma Wangsa & Hui Ming Wee & Shih-Hsien Tseng, 2019. "A coordinated vendor–buyer system considering loss and damage claims, insurance cost and stochastic lead time," 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. 10(3), pages 384-398, June.
    17. Oshmita Dey, 2019. "A fuzzy random integrated inventory model with imperfect production under optimal vendor investment," Operational Research, Springer, vol. 19(1), pages 101-115, March.
    18. Leopoldo Eduardo Cárdenas-Barrón & María José Lea Plaza-Makowsky & María Alejandra Sevilla-Roca & José María Núñez-Baumert & Buddhadev Mandal, 2021. "An Inventory Model for Imperfect Quality Products with Rework, Distinct Holding Costs, and Nonlinear Demand Dependent on Price," Mathematics, MDPI, vol. 9(12), pages 1-20, June.
    19. Dey, O. & Giri, B.C., 2014. "Optimal vendor investment for reducing defect rate in a vendor–buyer integrated system with imperfect production process," International Journal of Production Economics, Elsevier, vol. 155(C), pages 222-228.
    20. Nasr, Walid W. & Jaber, Mohamad Y., 2019. "Supplier development in a two-level lot sizing problem with non-conforming items and learning," International Journal of Production Economics, Elsevier, vol. 216(C), pages 349-363.

    More about this item

    Statistics

    Access and download statistics

    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:taf:tsysxx:v:47:y:2016:i:5:p:1142-1154. 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 Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TSYS20 .

    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.