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A Two-Warehouse Inventory Model with Quantity Discounts and Maintenance Actions under Imperfect Production Processes |
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PP: 2493-2505 |
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Author(s) |
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Tien-Yu Lin,
H. M. Srivastava,
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Abstract |
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| Many earlier studies dealing with the two-warehouse inventory model assumed that the direct cost of the product was
irrelevant and that production processes are perfect and stationary. However, in the real world, the purchase cost is some function of
the quantity purchased and the production processes may deteriorate and thus defective items will occur. This paper, therefore, aims at
developing a new inventory model under an imperfect production process. Three considerations are included in this new model: (1) The
supplier may offer quantity discounts to stimulate the retailer into ordering greater lot sizes; (2) The maintenance actions are employed
to restore the production process back to the in-control state when the process is out-of-control; (3) A two-warehouse policy is adopted
to hold a large amount of stock when a single warehouse would not be sufficient. The unique optimal lot size property and the candidate
optimal solution boundaries are derived. An efficient algorithm is developed to help the manager in accurately and quickly determining
the order policy. Some numerical examples are given to illustrate the proposed model and algorithm. Some interesting behaviors are
also observed. |
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