Combining an improved multi-delivery policy into a single-producer multi-retailer integrated inventory system with scrap in production

Note on \'Combining an Improved Multi-delivery Policy into a Single-producer Multi-retailer Integrated Inventory System with Scrap in Production\'

“…Reconsider the production-shipment problem for a single-producer multi-retailer integrated inventory system with scrap and an improved product distribution policy as studied by Chiu et al (2014). In their production-shipment model, annual production rate for a product manufactured by a single production unit is P and manufacturing cost is C per item.…”

“…Total production-inventory-delivery costs per replenishment cycle for the proposed model, TC (Q, n+1) consists of the setup cost, variable manufacturing cost, disposal cost, the fixed and variable shipping costs, inventory holding cost incurred in the production unit and stock holding cost incurred in the retailers' locations as follows (Chiu et al, 2014):…”

“…Taking randomness of scrap rate into account by applying the expected values of x and with further derivations, E [TCU (Q, n+1)] becomes (Chiu et al, 2014):…”

“…Similar methodologies have since been adopted to resolve different aspects of Economic Production Quantity (EPQ) models and various kinds of supply chain systems (Wu and Ouyang, 2003;Wee and Chung, 2006;Francis Leung, 2008;Lin et al, 2008;Chen et al, 2012). This study extends such an algebraic approach to a specific intra-supply chain system studied by Chiu et al (2014) and demonstrates that the optimal replenishment lot-size and shipment policy along with a simplified formula for the total system cost can be derived without derivatives.…”

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In a recent study, Chiu et al (2014) employed a mathematical modeling and conventional optimization technique to determine the optimal production-shipment policy for a single-producer multi-retailer integrated inventory system with scrap and an improved product distribution policy. This study replaces their optimization process of using differential calculus with an algebraic derivation.

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