The economic order quantity model with inspection policy of zero-defect single sampling

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahdi Nakhaeinejad
Keyword(s):  
Sample Size ◽  
Inventory Management ◽  
Optimal Solution ◽  
Random Variable ◽  
Solution Procedure ◽  
Order Quantity ◽  
Content Type ◽  
Numerical Examples ◽  
Proposed Model ◽  
Inspection Policy

PurposeThis paper proposes a new inventory model with inspection policy because in practice the received orders may contain non- conforming (NC) items. So, a buyer who receive an order from a supplier should use an inspection policy.Design/methodology/approachThe inspection policy is assumed to be zero-defect single sampling. Under this policy a lot is accepted only if no defect has been identified in the inspected sample. The fraction of NC is assumed to be a random variable following a Binomial distribution and the number of NC items detected by inspection assumed to be a random variable, which follows a hypergeometric distribution. Order quantity and sample size are the two decision variables. A solution procedure is presented for the proposed model. The proposed procedure presents the optimal solution.FindingsNumerical examples presented to illustrate the procedure outlined for the proposed model and its applicability. The results of numerical examples and comparing them with traditional EOQ model reveal that by the proposed model, the buyer could reduce total cost that shows the efficiency and validity of the proposed model.Originality/valueThe novelty of this paper is the new proposed model that considers inspection policy in inventory management. The proposed model determines sample size as well as order quantity to consider both subject of inventory management and quality control, simultaneously.

Applying the bootstrap method to newsvendor model incorporating group buying for optimal price discount and order quantity

Kybernetes ◽  
2017 ◽  
Vol 46 (10) ◽  
pp. 1692-1705 ◽  
Author(s):  
Yan-Kwang Chen ◽  
Chih-Teng Chen ◽  
Fei-Rung Chiu ◽  
Jiunn-Woei Lian
Keyword(s):  
Sample Size ◽  
Newsvendor Model ◽  
Order Quantity ◽  
Customer Demand ◽  
Optimal Price ◽  
Price Discount ◽  
Content Type ◽  
Group Buying ◽  
Demand Distribution ◽  
Proposed Model

Purpose Group buying (GB) is a shopping strategy through which customers obtain volume discounts on the products they purchase, whereas retailers obtain quick turnover. In the scenario of GB, the optimal discount strategy is a key issue because it affects the profit of sellers. Previous research has focused on exploring the price discount and order quantity with a fixed selling price of the product assuming that customer demand is uncertain (but follows a known distribution). This study aims to look at the same problem but goes further to examine the case where not only customer demand is certain but also the demand distribution is unknown. Design/methodology/approach In this study, optimal price discount and order quantity of a GB problem cast as a price-setting newsvendor problem were obtained assuming that the distribution of customer demand is unknown. The price–demand relationship is considered in addition form and product form, respectively. The bootstrap sampling technique is used to develop a solution procedure for the problem. To validate the usefulness of the proposed method, a simulated comparison of the proposed model and the existing one was conducted. The effects of sample size, demand form and parameters of the demand form on the performance of the proposed model are presented and discussed. Findings It is revealed from the numerical results that the proposed model is appropriate to the problem at hand, and it becomes more effective as sample size increases. Because the two forms of demand indicate restrictive assumptions about the effect of price on the variance of demand, it is found that the proposed model seems to be more suitable for addition form of demand. Originality/value This study contributes to the growing literature on GB models by developing a bootstrap-based newsvendor model to determine an optimal discount price and order quantity for a fixed-price GB website. This model can assist the sellers in making decisions on optimal discount price and order quantity without knowing the form of customer demand distribution.

scholarly journals Integrated inventory model involving quality improvement investment and advance-cash-credit payments

2021 ◽  
Author(s):  
Chih-Te Yang ◽  
Chien-Hsiu Huang ◽  
Liang-Yuh Ouyang
Keyword(s):  
Optimal Solution ◽  
Inventory Model ◽  
Decision Makers ◽  
Optimal Solutions ◽  
Order Quantity ◽  
Defective Items ◽  
Numerical Examples ◽  
Proposed Model ◽  
Production Inventory ◽  
Total Profit

This paper investigates the effects of investment and inspection policies on an integrated production–inventory model involving defective items and upstream advance-cash-credit payment provided by the supplier. In this model, retailers offer customers a downstream credit period. Furthermore, the defective rate of the item can be improved through capital co-investment by the supplier and retailer. The objective of this study was to determine the optimal shipping quantity, order quantity, and investment alternatives for maximizing the supply chain's joint total profit per unit time. An algorithm was developed to obtain the optimal solution for the proposed problem. Several numerical examples are used to demonstrate the proposed model and analyze the effects of parameters changes on the optimal solutions. Finally, management implications for relevant decision makers are obtained from the numerical examples.

scholarly journals Inventory Models with Defective Units and Sub-Lot Inspection

Mathematics ◽  
2020 ◽  
Vol 8 (6) ◽  
pp. 1038
Author(s):  
Han-Wen Tuan ◽  
Gino K. Yang ◽  
Kuo-Chen Hung
Keyword(s):  
Lower Bound ◽  
Optimal Solution ◽  
Upper Bounds ◽  
Interior Solution ◽  
Order Quantity ◽  
Inventory Models ◽  
Defective Items ◽  
Numerical Examples ◽  
Counter Example ◽  
Analytical Foundation

Inventory models must consider the probability of sub-optimal manufacturing and careless shipping to prevent the delivery of defective products to retailers. Retailers seeking to preserve a reputation of quality must also perform inspections of all items prior to sale. Inventory models that include sub-lot sampling inspections provide reasonable conditions by which to establish a lower bound and a pair of upper bounds in terms of order quantity. This should make it possible to determine the conditions of an optimal solution, which includes a unique interior solution to the problem of an order quantity satisfying the first partial derivative. The approach proposed in this paper can be used to solve the boundary. These study findings provide the analytical foundation for an inventory model that accounts for defective items and sub-lot sampling inspections. The numerical examples presented in a previous paper are used to demonstrate the derivation of an optimal solution. A counter-example is constructed to illustrate how existing iterative methods do not necessarily converge to the optimal solution.

A game theoretic approach to optimal pricing of flights and passengers at congested airports

2018 ◽  
Vol 13 (2) ◽  
pp. 434-454 ◽  
Author(s):  
Ata Allah Taleizadeh ◽  
Moeen Sammak Jalali ◽  
Shib Sankar Sana
Keyword(s):  
Large Scale ◽  
Congestion Pricing ◽  
Influential Factors ◽  
Future Research ◽  
Theoretic Approach ◽  
Content Type ◽  
Numerical Examples ◽  
Proposed Model ◽  
Managerial Implications ◽  
Game Theoretic

Purpose This paper aims to embark a mathematical model based on investigation and comparison of airport pricing policies under various types of competition, considering both per-passenger and per-flight charges at congested airports. Design/methodology/approach In this model, four-game theoretic strategies are assessed and closed-form formulas have been proved for each of the mentioned strategies. Numerical examples and graphical representations of the optimal solutions are provided to illustrate the models. Findings The rectitude of the presented formulas is evaluated with sensitivity analysis and numerical examples have been put forward. Finally, managerial implications are suggested by means of the proposed analysis. Research limitations/implications The represented model is inherently limited to investigate all the available and influential factors in the field of congestion pricing. With this regard, several studies can be implemented as the future research of this study. The applications of other game theoretic approaches such as Cartel games and its combination with the four mentioned games seem to be worthwhile. Moreover, it is recommended to investigate the effectiveness of the proposed model and formulations with a large-scale database. Originality/value The authors formulate a novel strategy that put forwards a four-game theoretic strategy, which helps managers to select the best suitable ones for their specific airline and/or air traveling companies. The authors find that by means of the proposed model, the application of Stackelberg–Bertrand behavior in the field of airport congestion pricing will rebound to a more profitable strategy in contrast with the other three represented methods.

Dual Approach to the Harmonized Model between Inventory Reduction and Heijunka (Production Leveling) based on the Minimum Average-energy Principle

2019 ◽  
Vol 01 (02) ◽  
Author(s):  
Tsuyoshi Kurihara ◽  
Takaaki Kawanaka ◽  
Hiroshi Yamashita
Keyword(s):  
Production Planning ◽  
Inventory Management ◽  
Average Energy ◽  
Optimal Solution ◽  
Exponential Smoothing ◽  
Aggregate Production Planning ◽  
Energy Principle ◽  
Dual Approach ◽  
Aggregate Production ◽  
Proposed Model

A major issue in manufacturing is the balance between inventory reduction and heijunka (i.e., production leveling). To address this issue in aggregate production planning, linear programming models that consider many factors and use “exponential smoothing” as an approximate leveling method have been mainly studied. However, this methodology has problems that may limit its use as an optimal solution approximate method, and impair the timeliness required for aggregate production planning by the complexity of these models. To solve this issue, we have been developing harmonized models to balance between lowering the inventory management energy and increasing the heijunka entropy, based on demand and inventory quantities as simple optimization models. In this study, we develop a dual approach to the previously proposed model to maximize the heijunka entropy and propose a new model to minimize the inventory management energy based on the “minimum average-energy principle.” We show that the proposed model’s inventory state is lower than that of traditional exponential smoothing through numerical experiments. This study, therefore, theoretically enables a new optimal solution to the harmonized (balancing) problem, based on the concept of entropy and energy, and practically enables aggregate production planning in a timely and simple manner.

A JOINT EOQ MODEL FOR SUPPLIER AND RETAILER WITH DETERIORATING ITEMS

2004 ◽  
Vol 21 (02) ◽  
pp. 163-178 ◽  
Author(s):  
CHINHO LIN ◽  
YIHSU LIN
Keyword(s):  
Necessary Conditions ◽  
Optimal Solution ◽  
Planning Horizon ◽  
Solution Procedure ◽  
Sensitivity Analyses ◽  
Mutual Cooperation ◽  
Total Cost ◽  
Numerical Examples ◽  
Eoq Model ◽  
Sufficient And Necessary Conditions

The paper studies the joint inventory model between supplier and retailer relying on mutual cooperation. Unlike other studies, the deteriorated rate and partial back-ordering are consistent with assumptions for dealing with more general cases. Since it is difficult to solve this problem directly, we derived the sufficient and necessary conditions in the planning horizon, and proposed a procedure to find the optimal solution. Numerical examples and sensitivity analyses are also provided to illustrate the solution procedure. The results reveal that the extensions of the model provide a wider and reasonable situation in practice, and that they also reduce the total cost.

scholarly journals Integrated multistage supply chain inventory model of multiple retailers with imperfect production and inspection systems

2021 ◽  
Author(s):  
Chi-Jie Lu ◽  
Ming Gu ◽  
Tian-Shyug Lee ◽  
Chih-Te Yang
Keyword(s):  
Supply Chain ◽  
Optimal Solution ◽  
Solution Procedure ◽  
Inventory Model ◽  
Model Complexity ◽  
Supply Chain System ◽  
Imperfect Production ◽  
Proposed Model ◽  
Inspection Systems ◽  
Total Profit

Abstract An integrated multistage supply chain inventory model containing a single manufacturer and multiple retailers is proposed to consider deteriorating materials and finished products with imperfect production and inspection systems. The main purpose is to jointly determine the manufacturer’s production and delivery strategies and the retailers’ replenishment strategies to maximize the integrated total profit. First, the individual total profit functions of the manufacturer and multiple retailers are established and are integrated to form the total profit function of the supply chain system. Then, to address the model complexity, an algorithm is proposed to obtain the optimal solution. Several practical numerical examples are presented to demonstrate the solution procedure, and a sensitivity analysis is performed on the major parameters. From the numerical results, several findings that differ from those in the previous literature were observed. First, retailers with larger market scale, better cost control, and inspection capabilities guarantee higher integrated total profit. Second, increasing the deterioration rates of materials and finished products affect the order quantity of materials in various ways. Third, the manufacturer’s shipping strategy is rigid and not easily adjusted in the proposed model. The performance of the proposed model has several meaningful management implications.

scholarly journals A Generalized Process Targeting Model and an Application Involving a Production Process with Multiple Products

Mathematics ◽  
2019 ◽  
Vol 7 (8) ◽  
pp. 699
Author(s):  
Mohammad A. M. Abdel-Aal ◽  
Shokri Z. Selim
Keyword(s):  
Lower Limit ◽  
Optimal Solution ◽  
Solution Procedure ◽  
Quality Characteristic ◽  
Specification Limits ◽  
Common Mean ◽  
Multiple Products ◽  
Upper Limit ◽  
Proposed Model ◽  
Special Cases

This paper presents a generalized targeting model that subsumes most known targeting problems. In this paper, a recurrent state is defined as a condition that requires reprocessing or rework. The generalized model can accommodate one or two specifications limits and can be used for the following quality characteristics: The nominal-the-better, the larger-the-better, and the smaller-the-better. This model can be used to find the optimal mean of a quality characteristic, as well as the optimal specification limits. In addition, the paper studies the conditions under which the solution to the proposed model can provide a global solution. The paper shows that, for some of the special cases and under very general conditions, the optimal lower limit should be zero and the optimal upper limit should be infinity. This paper proves that the expected profits improve for the case where only a lower limit on the quality characteristic is used, if a recurrent state is included by adding an optimized upper limit. A special case of the model is used to study the problem of determining a common mean for multiple products, as well as the optimal upper specification limits for each product. A solution procedure for maximizing the expected profits and obtaining the optimal solution is introduced. A numerical example is presented.

Risk analysis model for regional railroad investment

2017 ◽  
Vol 34 (1) ◽  
pp. 164-173 ◽  
Author(s):  
Sunduck Suh ◽  
Wonho Suh ◽  
Jung In Kim
Keyword(s):  
Risk Analysis ◽  
Financial Analysis ◽  
Mathematical Optimization ◽  
Optimal Solution ◽  
Optimization Procedure ◽  
Solution Procedure ◽  
Risk Modeling ◽  
Analysis Model ◽  
Content Type ◽  
Goals And Objectives

Purpose The purpose of this study is to model risks in financial analysis. These risks associated with uncertainties in the projects should be properly addressed to ensure proper decision regarding the projects. Performance indicators should be developed and assessing risks has high priority. All these activities comprise appraisal, and based on these, a proper course of action should be recommended. Design/methodology/approach To analyze the attractiveness of a project for foreign regional railroad investment or participation, the project should be analyzed in a systematic way. First, the project’s goals and objectives should be evaluated for compatibility. Also, criteria of acceptability for stakeholders should be checked against output from the project. Usually, a project can have many alternatives, and impacts of each alternative should be analyzed in terms of quantitative and qualitative forecasts of impacts. Benefits and costs need to be counted in proper units of measurement per goals and objectives. Findings This paper shows that risk modeling can reflect uncertainty in decision-making and provide robustness of modeling process and improved communication. Also, challenges are presented in using risk analysis. Originality/value To overcome the shortcomings of traditional mathematical optimization model in identifying best sets of projects for private application, the proposed model finds ways to incorporate risk management components for the optimization procedure. Based on simulation results, a brute force solution procedure using enumeration can be used. Another approach is recommended to use the genetic algorithm process to reduce the number of alternatives to search to reach an optimal solution.

scholarly journals An Integrated Vendor-Buyer Cooperative Inventory Model for Items with Imperfect Quality and Shortage Backordering

2012 ◽  
Vol 2012 ◽  
pp. 1-19 ◽  
Author(s):  
Jia-Tzer Hsu ◽  
Lie-Fern Hsu
Keyword(s):  
Probability Density Function ◽  
Cost Reduction ◽  
Optimal Solution ◽  
Solution Procedure ◽  
Variable Number ◽  
Defective Items ◽  
Numerical Examples ◽  
Imperfect Quality ◽  
Integrated Cost ◽  
Independent Decision

We develop a model to determine an integrated vendor-buyer inventory policy for items with imperfect quality and planned backorders. The production process is imperfect and produces a certain number of defective items with a known probability density function. The vendor delivers the items to the buyer in small lots of equally sized shipments. Upon receipt of the items, the buyer will conduct a 100% inspection. Since each lot contains a variable number of defective items, shortages may occur at the buyer. We assume that shortages are permitted and are completely backordered. The objective is to minimize the total joint annual costs incurred by the vendor and the buyer. The expected total annual integrated cost is derived and a solution procedure is provided to find the optimal solution. Numerical examples show that the integrated model gives an impressive cost reduction in comparison to an independent decision by the buyer.

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