A joint economic lot size model for raw material ordering, manufacturing setup, and finished goods delivering

Lee, Wenyih

doi:10.1016/j.omega.2004.03.013

Cited by 100 publications

(45 citation statements)

References 22 publications

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“…Khouja (2003b) developed a supply chain cost for each case. Lee (2005) considered a vendor (manufacturer), a buyer inventory control problem where the manufacturer orders raw materials from the supplier, then, through its production processes, converts the raw materials to finished products, and finally delivers the finished goods to the buyer. Six costs incurred in this supply chain, which are raw material ordering cost and holding cost, manufacturer's production setup cost and its finished goods holding cost, and buyer's inventory ordering cost and holding cost.…”

Section: Stochastic Modelsmentioning

confidence: 99%

“…The aim of this model is to determine order quantity of each stage (from its upstream) and shortage level of each stage (for its downstream) such that the total cost of the supply chain to be minimized. Their model is an extension of the work of Lee (2005) from a linear three stages supply network including producer, distributor and retailer to a four stages supply network by adding one supplier. The complexity of the problem necessitated the development of heuristic solution procedures based on Genetic Algorithm to solve this problem.…”

Section: Stochastic Modelsmentioning

confidence: 99%

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Quantitative Models for Centralised Supply Chain Coordination

Jaber¹,

Zolfaghari²

2008

Supply Chain

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IntroductionA supply chain is defined as a network of facilities and distribution options that perform the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Managing such functions along the whole chain; that is, from the supplier's supplier to the customer's customer; requires a great deal of coordination among the players in the chain. The effectiveness of coordination in supply chains could be measured in two ways: reduction in total supply chain costs and enhanced coordination services provided to the end customer ⎯ and to all players in the supply chain. Inventory is the highest cost in a supply chain accounting for almost 50% of the total logistics costs. Integrating order quantities models among players in a supply chain is a method of achieving coordination. For coordination to be successful, incentive schemes must be adopted. The literature on supply chain coordination have proposed several incentive schemes for coordination; such as quantity discounts, permissible delay in payments, price discounts, volume discount, common replenishment periods. The available quantitative models in supply chain coordination consider up to four levels (i.e., tier-1 supplier, tier-2 supplier, manufacturer, and buyer), with the majority of studies investigating a two-level supply chain with varying assumptions (e.g., multiple buyers, stochastic demand, imperfect quality, etc). Coordination decisions in supply chains are either centralized or decentralized decision-making processes. A centralized decision making process assumes a unique decision-maker (a team) managing the whole supply chain with an objective to minimize (maximize) the total supply chain cost (profit), whereas a decentralized decision-making process involves multiple decision-makers who have conflicting objectives. This chapter will review the literature for quantitative models for centralised supply chain coordination that emphasize inventory management for the period from 1990 to end of 2007. In this chapter, we will classify the models on the basis of incentive schemes, supply chain levels, and assumptions. This chapter will also provide a map indicative of the limitations of the available studies and steer readers to future directions along this line of research. Centralised supply chain coordinationA typical supply chain consists of multistage business entities where raw materials and components are pushed forward from the supplier's supplier to the customer's customer. During this forward push, value is gradually added at each entity in the supply chain transforming raw materials and components to take their final form as finished products at the customer's end, the buyer. These business entities may be owned by the same organization or by several organizations. Goyal & Gupta (1989) suggested that coordination could be achieved by integrating lotsizing models. However, coordinating orders among players in a supply chain might...

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Section: Stochastic Modelsmentioning

confidence: 99%

Section: Stochastic Modelsmentioning

confidence: 99%

Quantitative Models for Centralised Supply Chain Coordination

Jaber¹,

Zolfaghari²

2008

Supply Chain

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“…In fact, models incorporating raw material procurement in manufacturing activities perform better in terms of average total cost than those tackling the decisions involved separately [7]. In this context, Hajji et al [8] addressed an integrated production and replenishment control problem in a three-stage supply chain with an unreliable transformation stage and supplier.…”

Section: Introductionmentioning

confidence: 99%

Integrated quality strategy in production and raw material replenishment in a manufacturing-oriented supply chain

Hlioui

Gharbi

Hajji

2015

Int J Adv Manuf Technol

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Abstract:This paper deals with the coordination of production, replenishment and inspection decisions for a manufacturing-oriented supply chain with a failure-prone transformation stage, random lead-time and imperfect delivered lots. Upon reception of the lot, the manufacturer executes an acceptance sampling plan with a zero nonconforming criterion. If the sample does not contain non-conforming items, the lot is accepted; otherwise, it is rejected. In this work, two strategies regarding the refused sampled lot are studied. The first one involves a return of the lot to the supplier, who commits to improving the quality of the lot, while the second assumes that the manufacturer performs a 100% inspection and rectification operation. This work presents two main objectives. The first one is to jointly optimize, in a stochastic and dynamic context, the ordering point of raw material, the lot size of raw material, the final product inventory threshold and the severity of the sampling plan using a simulation-based optimization approach. The second one is to determine the best of the two quality control strategy. The in-depth study has shown that no strategy could be preferred in all the cases. For this reasons, we present an easy decision-making tool (Indifference curves) to help the manager to select the best quality control strategy when considering the entire supply chain.

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“…Goyal and Deshmukh [3] developed a model for IPP systems in just in time JIT environment to minimize set up time. And later, Lee [4] extend the IPP to an integrated supply chain problem by integrating the economic lot size of raw material, manufacturing set up and finished products. However, those studies assume that items can be stored infinitely, while in fact, some items have limited life time.…”

Section: Introductionmentioning

confidence: 99%

Model of an Integrated Procurement-Production System for Food Products Incorporating Quality Loss during Storage Time

Fauza¹,

Amer²,

Lee³

2013

IJMMM

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Abstract-Research on procurement-production systems for deteriorating items has been done. The majority of studies assume that the perishable characteristics affect only the quantity of inventoried items. For food products, however, their quantity remains constant during their shelf life period, but the quality deteriorates over time. This paper proposes a new procurement-production model incorporating this situation. The quality change behavior of food products is approached differently depending on their forms either as raw materials or finished goods. As raw materials, the kinetic model is used to represent the quality degradation during storage time, while as finished goods the shelf-life dependent pricing is utilized to describe the value loss due to the quality perception of customers. A mathematical model representing the integrated procurement-production of raw materials and finished goods at a manufacturer is established in this research. The objective is to maximize the total profit per unit time of the system by controlling a number of variables, namely the production cycle (T), the number of raw materials' procurement over one production cycle (m) and the number of finished goods delivery over one production cycle (n).Index Terms-Deteriorating items, food inventory, procurement-production system, quality loss, value loss. I. INTRODUCTIONEver since EOQ (Economic of Quantity) inventory control has been introduced, many researchers still develop it to solve various inventory problems. Conventionally, economic lot-size of raw materials was decided separately from finished product and this may lead to sub-optimization. It is because demand for raw materials depends on production schedule of finished products. Later, Goyal [1] developed an integrated inventory model for raw material and finished product. This research gave the first contribution in the field of integrated procurement-production (IPP) systems.Recently, research in the field of IPP system receives significant attention from scholars and many inventory models has been developed to accommodate this issue [2]. Goyal and Deshmukh [3] developed a model for IPP systems in just in time JIT environment to minimize set up time. And later, Lee [4] extend the IPP to an integrated supply chain problem by integrating the economic lot size of raw material, manufacturing set up and finished products. However, those studies assume that items can be stored infinitely, while in Manuscript received November 5, 2012; revised January 10, 2013. Gusti Fauza is with the School of Engineering, University of South Australia and Food Science and Technology Department, Sebelas Maret University, Indonesia (email: faugy001@mymail.unisa.edu.au).Yousef Amer and Sang Heon Lee are with the School of Engineering, University of South Australia. fact, some items have limited life time.In reality, it is often found that some particular items deteriorate over the storage period, for instance food products. For such items, the quality degradation during the storage time can lead ...

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A joint economic lot size model for raw material ordering, manufacturing setup, and finished goods delivering

Cited by 100 publications

References 22 publications

Quantitative Models for Centralised Supply Chain Coordination

Quantitative Models for Centralised Supply Chain Coordination

Integrated quality strategy in production and raw material replenishment in a manufacturing-oriented supply chain

Model of an Integrated Procurement-Production System for Food Products Incorporating Quality Loss during Storage Time

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