The effect of purchasing strategy on the economic production quantity model subject to random machine breakdown Online publication date: Fri, 14-May-2021
by Mehdi Deiranlou; Farzad Dehghanian; Mohammadali Pirayesh
International Journal of Procurement Management (IJPM), Vol. 14, No. 3, 2021
Abstract: In this article, we develop an economic production quantity (EPQ) model subject to process deterioration, machine breakdown and two types of repair, and study the influence of purchasing strategy on the system's expected total cost, as an alternative option to holding safety stock. It is obvious that the shortages may occur due to the prolonged repair time. To avoid this issue, we assume that the manufacturer could purchase some quantities from an available supplier with fixed non-zero lead-time. This paper addresses the following question: how much production lot size and purchasing lot size are required to minimise the expected total cost? The model is developed under general machine breakdown and repairs time distributions. The optimality of the model under exponential failure and exponential repair times are studied. For the numerical example, we illustrate the outcome of the proposed model and perform a sensitivity analysis on parameters, which directly influence optimal decisions.
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