TY - JOUR

T1 - An economic production quantity model with a positive resetup point under random demand

AU - Lee, Shine Der

AU - Yang, Chin Ming

N1 - Funding Information:
The authors thank the anonymous referees and the editor, for their constructive input and comments, which served to improve the manuscript. This work was supported in part by the National Science Council of Taiwan under Grant NSC95-2416-H006-025-MY2 .

PY - 2013/3/1

Y1 - 2013/3/1

N2 - In this paper, an extended economic production quantity (EPQ) model is investigated, where demand follows a random process. This study is motivated by an industrial case for precision machine assembly in the machinery industry. Both a positive resetup point s and a fixed lot size Q are implemented in this production control policy. To cope with random demand, a resetup point, i.e., the lowest inventory level to start the production, is adapted to minimize stock shortage during the replenishment cycle. The considered cost includes setup cost, inventory carrying cost, and shortage cost, where shortage may occur at the production stage and/or at the end of one replenishment cycle. Under some mild conditions, the expected cost per unit time can be shown to be convex with respect to decision parameters s and Q. Further computational study has demonstrated that the proposed model outperforms the classical EPQ when demand is random. In particular, a positive resetup point contributes to a significant portion of this cost savings when compared with that in the classical lot sizing policy.

AB - In this paper, an extended economic production quantity (EPQ) model is investigated, where demand follows a random process. This study is motivated by an industrial case for precision machine assembly in the machinery industry. Both a positive resetup point s and a fixed lot size Q are implemented in this production control policy. To cope with random demand, a resetup point, i.e., the lowest inventory level to start the production, is adapted to minimize stock shortage during the replenishment cycle. The considered cost includes setup cost, inventory carrying cost, and shortage cost, where shortage may occur at the production stage and/or at the end of one replenishment cycle. Under some mild conditions, the expected cost per unit time can be shown to be convex with respect to decision parameters s and Q. Further computational study has demonstrated that the proposed model outperforms the classical EPQ when demand is random. In particular, a positive resetup point contributes to a significant portion of this cost savings when compared with that in the classical lot sizing policy.

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U2 - 10.1016/j.apm.2012.07.008

DO - 10.1016/j.apm.2012.07.008

M3 - Article

AN - SCOPUS:84872498950

VL - 37

SP - 3340

EP - 3354

JO - Applied Mathematical Modelling

JF - Applied Mathematical Modelling

SN - 0307-904X

IS - 5

ER -