Integrated vendor–buyer strategies for imperfect production systems with maintenance and warranty policy

Abstract

Collaboration has evolved as a key component of many modern supply chains, supporting the competitive advantages of companies in a range of operations from manufacturing to sales. With this viewpoint, the present paper develops an integrated inventory model in which manufacturing is carried out at the vendor's end so as to fulfill demand at the buyer's doorway. As the production process is presumed to be imperfect it shifts from an "in-control" state to "out-of-control" state at any random time and yields non-conforming items. The vendor uses regular preventive maintenance actions for the efficient operation of the production system and offers free minimal repair warranty on the products sold to the buyer. Along with preventive maintenance actions the vendor also uses the rework process and restoration process as effective steps towards minimizing the imperfections of the production system. The proposed model solves the non-linear cost minimization problem through a generalized reduced gradient method by using Lingo 15.0. The aim is to jointly optimize the order size, backorder size and the number of shipments in order to minimize the integrated cost of the vendor and the buyer. Numerical analysis and sensitivity analysis is performed on key parameters that render some important supervisory insights. MathematicsSubject Classification. 90B05. Article published by EDP Sciences c EDP Sciences, ROADEF, SMAI 2020 436 A. KHANNA ET AL.business and is widely implemented. Prompted to this, an integrated inventory model has been presented by considering rework of non-conforming items, restoration of the production system and use of regular preventive maintenance actions during the non-production time. Also, the vendor offers free minimal repair warranty to the buyer as a promotional tool. An integrated model is developed with the motive to serve the decision makers with some important inferences. Almost all the organizations these days consider quality and reliability as a genuine technique to achieve improved profitability and greater benefits for the organization. In the manufacturing sector occurrence of imperfect quality items due to the faulty production process is unavoidable. Some of the interesting work in this area is given by [1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18]. In practical production systems, imperfect items can be reworked, which significantly reduces the overall costs of production and inventory [19][20][21][22][23][24][25][26].Since the production process is imperfect so it is essential to take proper maintenance actions to deliver breakdown-free operations. Preventive maintenance comes with a motto to ensure optimum life for the equipment and it also increases productivity by reducing the downtime of a production unit. The primary goal of maintenance actions is to safeguard the system against any breakdown and malfunction during run-time. Reference [29] investigated the effects of pull systems and level material shipping to derive formulas for the buffer in limited demand variab...

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