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Changing the values of parameters on lot size reorder point model

The Just-In-Time (JIT) philosophy has received a great deal of attention. Several actions such as improving quality, reducing setup cost and shortening lead time have been recognized as effective ways to achieve the underlying goal of JIT. This paper considers the partial backorders, lot size reorder point inventory system with an imperfect production process. | Yugoslav Journal of Operations Research 13 (2003), Number 1, 69-84 CHANGING THE VALUES OF PARAMETERS ON LOT SIZE REORDER POINT MODEL Hung-Chi CHANG Department of Logistics Engineering and Management National Taichung Institute of Technology Taichung, Taiwan 404, R.O.C. hungchi@mail.ntit.edu.tw Abstract: The Just-In-Time (JIT) philosophy has received a great deal of attention. Several actions such as improving quality, reducing setup cost and shortening lead time have been recognized as effective ways to achieve the underlying goal of JIT. This paper considers the partial backorders, lot size reorder point inventory system with an imperfect production process. The objective is to simultaneously optimize the lot size, reorder point, process quality, setup cost and lead time, constrained on a service level. We assume the explicit distributional form of lead time demand is unknown but the mean and standard deviation are given. The minimax distribution free approach is utilized to solve the problem and a numerical example is provided to illustrate the results. Keywords: Inventory, service level, minimax distribution free procedure. 1. INTRODUCTION In the classical production/inventory models, such as the economic order quantity (EOQ) model, the setup/ordering cost and lead time are assumed to be fixed, so does quality of production process (products). In other words, these factors (setup cost, lead time, and quality) are treated as givens (Silver [17]) and not subject to control. However, among the modern production/inventory management, the Japanese successful experience of using Just-In-Time (JIT) production has evidenced that the above factors can be controlled through various efforts. Also, accompanying the growth of JIT philosophy, considerable papers discussing the issues related to changing the givens have been presented. 70 H.-C. Chang / Changing the Values of Parameters on Lot Size Reorder Point Model Concerning lead time reduction, Liao and Shyu [8] .