Production–shipment policy for EPQ model with quality assurance and an improved delivery schedule

Singa Wang Chiu, Chien-Hua Lee, Feng-Tsung Cheng and Chia-Kuan Ting

Mathematical and Computer Modelling of Dynamical Systems, 2013, vol. 19, issue 4, 344-352

Abstract: This article is concerned with determining the production–shipment policy for an economic production quantity model with quality assurance and an improved delivery schedule. We extend a recent work by Chiu et al. [Y.-S.P. Chiu, C.-A.K. Lin, H.-H. Chang, and V. Chiu, Mathematical modeling for determining economic batch size and optimal number of deliveries for EPQ model with quality assurance, Math. Comput. Model. Dyn. Sys. 16 (4) (2010), pp. 373–388] by incorporating an alternative delivery plan that aims at lowering the inventory holding cost for both supplier and buyer in such an integrated inventory system. Mathematical modelling along with Hessian matrix equations is used, and as a result the optimal production batch size and optimal number of deliveries are derived. A numerical example is provided to demonstrate the practical use of the results and the significant savings in stock holding costs for both vendor and buyer.

Date: 2013
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DOI: 10.1080/13873954.2013.763282

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