Meeting multiproduct demand with a hybrid inventory replenishment system featuring quality reassurance
Globalization has not only generated immense business opportunities, but also created a very competitive marketplace. To retain competitive advantage, a manufacturer must satisfy a client's multiproduct and quality requirements with limited in-house capacity. An outsourcing strategy can overcom...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2019-01-01
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| Series: | Operations Research Perspectives |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2214716018303555 |
| _version_ | 1828382473691594752 |
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| author | Yuan-Shyi Peter Chiu Victoria Chiu Hong-Dar Lin Huei-Hsin Chang |
| author_facet | Yuan-Shyi Peter Chiu Victoria Chiu Hong-Dar Lin Huei-Hsin Chang |
| author_sort | Yuan-Shyi Peter Chiu |
| collection | DOAJ |
| description | Globalization has not only generated immense business opportunities, but also created a very competitive marketplace. To retain competitive advantage, a manufacturer must satisfy a client's multiproduct and quality requirements with limited in-house capacity. An outsourcing strategy can overcome capacity constraints and shorten the fabrication cycle time. This study explores a hybrid multiproduct single-machine inventory replenishment system incorporating an outsourcing plan. The in-house multiproduct fabrication process is under a common cycle time policy. That is, each product receives one replenishment in a common cycle length. All fabricated items are inspected for quality; items with random defects are sorted out as scrap and repairable, and the rework occurs immediately after the regular fabrication. All reworked products that fail the quality reassurance test are scrapped. The quality of outsourcing items is assumed to be guaranteed by the outside provider. Our objective is to determine the optimal common cycle time that minimizes the total relevant cost. An accurate model is constructed to represent the characteristics of the system studied; furthermore, we utilize mathematical analysis to derive the total system costs and apply differential calculus to find the optimal cycle length. A numerical example illustrates the applicability of our result and highlights the effect of variations in outsourcing- and quality-related attributes on the optimal solution, as well as the various performance indicators that facilitate planning and controlling decisions. Keywords: Hybrid inventory replenishment, Multiproduct fabrication system, Outsourcing, Common cycle time, Product quality reassurance, Failure in rework |
| first_indexed | 2024-12-10T04:32:40Z |
| format | Article |
| id | doaj.art-b91c7cc231b943e5a8178bb1b42d266f |
| institution | Directory Open Access Journal |
| issn | 2214-7160 |
| language | English |
| last_indexed | 2024-12-10T04:32:40Z |
| publishDate | 2019-01-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Operations Research Perspectives |
| spelling | doaj.art-b91c7cc231b943e5a8178bb1b42d266f2022-12-22T02:02:06ZengElsevierOperations Research Perspectives2214-71602019-01-016Meeting multiproduct demand with a hybrid inventory replenishment system featuring quality reassuranceYuan-Shyi Peter Chiu0Victoria Chiu1Hong-Dar Lin2Huei-Hsin Chang3Department of Industrial Engineering & Management, Chaoyang University of Technology, Taichung 413, TaiwanDepartment of Accounting, Finance and Law, State University of New York at Oswego, Oswego, NY 13126, USADepartment of Industrial Engineering & Management, Chaoyang University of Technology, Taichung 413, Taiwan; Corresponding author.Department of Finance, Chaoyang University of Technology, Taichung, TaiwanGlobalization has not only generated immense business opportunities, but also created a very competitive marketplace. To retain competitive advantage, a manufacturer must satisfy a client's multiproduct and quality requirements with limited in-house capacity. An outsourcing strategy can overcome capacity constraints and shorten the fabrication cycle time. This study explores a hybrid multiproduct single-machine inventory replenishment system incorporating an outsourcing plan. The in-house multiproduct fabrication process is under a common cycle time policy. That is, each product receives one replenishment in a common cycle length. All fabricated items are inspected for quality; items with random defects are sorted out as scrap and repairable, and the rework occurs immediately after the regular fabrication. All reworked products that fail the quality reassurance test are scrapped. The quality of outsourcing items is assumed to be guaranteed by the outside provider. Our objective is to determine the optimal common cycle time that minimizes the total relevant cost. An accurate model is constructed to represent the characteristics of the system studied; furthermore, we utilize mathematical analysis to derive the total system costs and apply differential calculus to find the optimal cycle length. A numerical example illustrates the applicability of our result and highlights the effect of variations in outsourcing- and quality-related attributes on the optimal solution, as well as the various performance indicators that facilitate planning and controlling decisions. Keywords: Hybrid inventory replenishment, Multiproduct fabrication system, Outsourcing, Common cycle time, Product quality reassurance, Failure in reworkhttp://www.sciencedirect.com/science/article/pii/S2214716018303555 |
| spellingShingle | Yuan-Shyi Peter Chiu Victoria Chiu Hong-Dar Lin Huei-Hsin Chang Meeting multiproduct demand with a hybrid inventory replenishment system featuring quality reassurance Operations Research Perspectives |
| title | Meeting multiproduct demand with a hybrid inventory replenishment system featuring quality reassurance |
| title_full | Meeting multiproduct demand with a hybrid inventory replenishment system featuring quality reassurance |
| title_fullStr | Meeting multiproduct demand with a hybrid inventory replenishment system featuring quality reassurance |
| title_full_unstemmed | Meeting multiproduct demand with a hybrid inventory replenishment system featuring quality reassurance |
| title_short | Meeting multiproduct demand with a hybrid inventory replenishment system featuring quality reassurance |
| title_sort | meeting multiproduct demand with a hybrid inventory replenishment system featuring quality reassurance |
| url | http://www.sciencedirect.com/science/article/pii/S2214716018303555 |
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