Batch scheduling of deteriorating reworkables

2007-2008 > Academic research: refereed > Publication in refereed journalAccepted ManuscriptPublishe

A multi-product FPR model with rework and an improved delivery policy

A multi-item finite production rate (FPR) model with rework and an improved delivery policy is examined in this paper. Unlike the classic FPR model whose purpose is to derive the most economic lot size for a single-product production system with perfect quality and a continuous issuing policy, this paper considers a production of multiple products on a single machine, rework of all nonconforming items produced, and a cost-reduction, multi-delivery policy. We extend the work of Chiu et al. [1] by incorporating an improved n+1 shipment policy into their model. According to such a policy, one extra delivery of finished items is made during vendor’s production uptime to satisfy product demands during the period of vendor’s uptime and rework time. When the rest of the production lot is quality assured and the rework has been finished as well, n fixed-quantity installments of finished items are delivered to customers. The objectives are to determine an optimal, common-production cycle time that minimizes the long-run average system cost per time unit, study the effects of rework and the improved delivery policy on the optimal production. Mathematical modelling and analysis is used to derive a closed-form, optimal, common-cycle time. Finally, practical usages of the obtained results are demonstrated by a numerical example

Trade Credit Policies for Supplier, Manufacturer, and Retailer: An Imperfect Production-Inventory System with Rework

In this study, we developed a trade credit policy for a three-layer supply chain consisting of a supplier, a manufacturer and a retailer. We propose an optimal production rate and selling price for the manufacturer and the retailer under an imperfect production system. The suggested coordination policy optimizes the profit of each supply chain member. Two models were formulated for two real-life strategies respectively. The first one is a collaborative (integrated) system and the second one is a Stackelberg leadership system. Both strategies were analyzed for various credit periods, respectively offered by the supplier to the manufacturer, by the manufacturer to the retailer, and by the retailer to the customers, by considering price-sensitive demand and a certain replenishment rate. Finally, we concluded which strategy will be better for inventory management under the given restrictions in the form of propositions. The concavity property for the net profit function was established with respect to the selling price and the production rate, which was also described graphically and analyzed by numerical examples

Trade Credit Policies for Supplier, Manufacturer, and Retailer: An Imperfect Production-Inventory System with Rework

In this study, we developed a trade credit policy for a three-layer supply chain consisting of a supplier, a manufacturer and a retailer. We propose an optimal production rate and selling price for the manufacturer and the retailer under an imperfect production system. The suggested coordination policy optimizes the profit of each supply chain member. Two models were formulated for two real-life strategies respectively. The first one is a collaborative (integrated) system and the second one is a Stackelberg leadership system. Both strategies were analyzed for various credit periods, respectively offered by the supplier to the manufacturer, by the manufacturer to the retailer, and by the retailer to the customers, by considering price-sensitive demand and a certain replenishment rate. Finally, we concluded which strategy will be better for inventory management under the given restrictions in the form of propositions. The concavity property for the net profit function was established with respect to the selling price and the production rate, which was also described graphically and analyzed by numerical examples

Batching Work and Rework Processes with Limited Deterioration of Reworkables

We study the problem of planning the production of new and recovering defective items of the same product manufactured on the same facility. Items of the product are produced in batches. The processing of a batch includes two stages. In the first work stage, all items of a batch are manufactured and good quality items go to the inventory to satisfy given demands. In the second rework stage, some of the defective items of the same batch are reworked. Each reworked item has the required good quality. During waiting for rework, defective items deteriorate. There is a given deterioration time limit. A defective item that is decided not to be reworked or cannot be reworked because it will exceed the deterioration time limit is disposed of immediately after its work operation completes. Deterioration results in an increase in time and cost for performing rework processes. It is assumed that the percentage of defective items is the same in each batch, and that they are evenly distributed in each batch. A setup time as well as a setup cost is required to start batch processing and to switch from production to rework. The objective is to find batch sizes and positions of items to be reworked such that a given number of good quality items is produced and total setup, rework, inventory holding, shortage and disposal cost is minimized. A polynomial dynamic programming algorithm is presented to solve this problem

Refuse or reuse: managing the quality of returns in product recovery systems

Increasing legislative and societal pressures are forcing manufacturers to become environmentally-conscious and take responsibility for the fate of their goods after they have been used by consumers. As a result, some manufacturers operate hybrid systems which produce new goods and recover used goods. Product recovery describes the process by which used products are returned to their manufacturers or sent to a specialised facility for recovery, before being sold on the original or a secondary market. The quality of the returned goods is a significant issue in product recovery systems as it can affect both the type of recovery and costs associated with it. Quality in product recovery systems has not been adequately studied, with many authors either ignoring the possibility of receiving lower quality returns, or assuming they are disposed of rather than recovered. However, such assumptions ignore the possibility that the firm might be able to salvage value from lower quality returns by using them for parts or materials. This thesis presents four models that investigate the importance of considering the quality of returns in the management of inventory in a product recovery system, by examining the cost-effectiveness of recovering both high quality and low quality returns. The first model is a deterministic lot-sizing model of a product recovery system. It was found that performing both high and low quality recovery reduced the sensitivity of the optimal cost to operational restrictions on the choice of decision variables. The second model is a discrete-time, periodic-review model formulated as a Markov decision process (MDP) and introduces uncertainty in demand, returns, and the quality of the returns. It was found that performing both types of recovery can lead to cost savings and better customer service for firms through an increased fill rate. The third model addresses those industries where produced and recovered goods cannot be sold on the same market due to customers’ perceptions and environmental legalisation. Using an MDP formulation, the model examines a product recovery system in which produced and recovered goods are sold on separate markets. The profitability of offering two-way substitution between these markets was investigated. It was found that offering substitution can allow firms to increase both their profits and fill rates. The fourth model examines the issue of separate markets and substitution in the continuous time domain using a semi-Markov decision process. The continuous nature of the model allows more detailed examination of the substitution decision. It was found that offering substitution can allow firms to increase their profit and in some cases also increase their fill rate. In some cases, production is performed less frequently when downward substitution can be offered, and recovery is performed less often when upward substitution can be offered. The findings of this thesis could be used to help a firm that is currently recovering high quality returns assess the cost-effectiveness of also recovering lower quality returns. Recovering low-quality items, rather than disposing of them, may allow a firm to increase the amount it recycles. The findings highlight the importance of considering the quality of returns when managing a product recovery system as they show that economic gains can be achieved by reusing rather than refusing low quality returns