Original scientific paper
Integrating a cost-reduction shipment plan into a single-producer multi-retailer system with rework
Singa Wang Chiu
; Department of Business Administration, Chaoyang University of Technology, Gifong East Road, Wufong, Taichung 413, TAIWAN
Nong Pan
; Department of Business Administration, Chaoyang University of Technology, Gifong East Road, Wufong, Taichung 413, TAIWAN
Kuo-Wei Chiang
; Department of Industrial Engineering & Management, Chaoyang University of Technology, Gifong East Road, Wufong, Taichung 413, TAIWAN
Yuan-Shyi Peter Chiu
; Department of Industrial Engineering & Management, Chaoyang University of Technology, Gifong East Road, Wufong, Taichung 413, TAIWAN
Abstract
This study integrates a cost-reduction shipment plan into a single-producer, multi-retailer system with rework process. In a recent article, Chiu et al. [1] have examined a single-producer, multi-retailer integrated inventory model with a rework process. For the purpose of reducing the inventory holding cost, this study combines an alternative n+1 product distribution policy into their model. Under the proposed shipment plan, an extra (initial) delivery of finished items takes place during the production uptime to meet the retailers’ product demands for the periods of the producer’s uptime and reworking time. Upon the completion of rework, multiple shipments will be delivered synchronously to m different retailers. The objectives are to find an optimal production-shipment policy that minimizes the expected system cost for such a supply chain system, and to demonstrate that the result of this study gives significant holding cost savings in comparison with Chiu et al.’s model [1]. With the help of mathematical modelling and Hessian matrix equations, the optimal operating policy for the proposed model is derived. Through a numerical example, we demonstrate our model gives significant savings in stock holding cost for both the producer and retailers.
Keywords
optimization; supply chains; production lot-size; multiple retailers; rework; multi-delivery
Hrčak ID:
185744
URI
Publication date:
18.6.2014.
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