Multi-Item EPQ Model with Scrap, Rework and Multi-Delivery using Common Cycle Policy

 

S.W. Chiu¹, C-T. Tseng², M-F. Wu³* and P-C. Sung²

 

¹ Department of Business Administration.

² Department of Industrial Engineering and Management Chaoyang University of Technology, Taichung 413, Taiwan.

³ Department of Industrial Engineering and Systems Management, Feng Chia University, Taichung 407, Taiwan. *mfwu@fcu.edu.tw

 

ABSTRACT

This paper is concerned with determining the optimal common production cycle policy for a multi-item economic production quantity (EPQ) model with scrap, rework and multiple deliveries. The classic EPQ model considers the optimal replenishment quantity of single product under a perfect production assumption and a continuous inventory issuing policy. However, in real life production planning, manufacturing firms often plan to have multiple products made in turn on a single machine in order to maximize the machine utilization. Also, dealing with random defective items during the production run seems to be an inevitable task, and the multi-delivery policy is commonly adopted for distributing finished items to customers. In this study, we assume a portion of nonconforming items is scrap and the other portion of them can be reworked and repaired in the same production cycle with additional cost. The objective is to determine an optimal common production cycle time that minimizes the long-run average cost per unit time for such a specific multi-item EPQ model with scrap, rework and multi-delivery policy. Mathematical modeling and analysis is used and a closed-form optimal common cycle time for multi-item production planning is obtained. A numerical example is provided to demonstrate the practical usage of research result.

Keywords: Economic Production Quantity, Optimization, Multi-Item Production, Common Cycle, Scrap, Rework, Multi-shipment.

 

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Acknowledgements

Authors greatly appreciate National Science Council of Taiwan for supporting this research under grant number: NSC 102-2410-H-324-005.

 

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