Pricing and production decisions in multi-product single machine manufacturing system with discrete delivery and rework

摘要

The classic economic production quantity (EPQ) inventory model assumes all items produced are of perfect quality. However, in most real-life manufacturing settings, generation of defective items is unavoidable. Reworking of imperfect items reduces the overall costs. The finished products can only be delivered to customers if the whole lot is quality assured at the end of rework. In addition, in many circumstances the delivery of the products is not continuous. This paper studies pricing and production decisions in multi-product single machine manufacturing system considering discrete delivery as well as rework. We solved this problem in two situations: first, when the condition is satisfied and second, when it is not satisfied. The obtained closed-form solution is optimal when the only constraint of the problem is satisfied; otherwise, the Lagrangian relaxation method is used to determine T* and Q*. At the end, numerical example is solved to illustrate the validity of the proposed solution procedure.