A delayed differentiation multi-product FPR model with scrap and a multi-delivery policy – II: Using two-machine production scheme

Abstract

This paper concerns a delayed differentiation multi-product finite production rate (FPR) model with scrap and multi-delivery policy using a two-machine production scheme. Conventional FPR model considers a single product, single-stage production with all products fabricated being of perfect quality, and product demand satisfied by a continuous inventory issuing policy. However, in real vendor-buyer integrated systems, most vendors would adopt a multi-product production plan to maximize machine utilization. They often use a periodic or multi-shipment policy to distribute their finished products. When planning to produce a cluster of multiple products that share a common intermediate part, the vendor would often evaluate a two-stage production scheme. The first stage manufactures only the common parts for all products and the second stage separately manufactures the end products. The aim is to shorten the replenishment cycle time and reduce overall production-inventory related costs. This study considers a two-machine production scheme and the two-stage production process with the objective of determining the optimal production cycle time and number of deliveries. A numerical example with sensitivity analysis is provided to demonstrate practical use of the obtained results as well as to compare the proposed production scheme to that of using a single machine in the multi-product two-stage FPR model