Optimal batch size and investment in multistage production systems with scrap

Hsu Hua Lee, M. Jeya Chandra, V. J. Deleveaux

Research output: Contribution to journalArticle

45 Scopus citations

Abstract

In this paper, we study the problem of selecting the optimum production batch size in multistage manufacturing facilities with scrap and determining the optimal amount of investment. We analyse the e€ ect of investment for quality improvement on the reduction of the proportion of defectives, and the effect of this reduction on processing cost, setup cost, holding cost, and proR t loss. The quality characteristic of the product manufactured is assumed to be normally distributed with a mean equal to the target value. The purpose of the investment is to reduce the variance of the quality characteristic and hence the proportion of defectives. The model assumes known demand, which must be satisfied completely, scrappage at each stage and profit loss due to scrap. Using this model, the optimal values of the production quantity and the proportion of defectives for minimizing the total cost are obtained. The optimal investment is then obtained using the relationship between the investment and the proportion of defectives.

Original languageEnglish (US)
Pages (from-to)586-596
Number of pages11
JournalProduction Planning and Control
Volume8
Issue number6
DOIs
StatePublished - Jan 1 1997

All Science Journal Classification (ASJC) codes

  • Computer Science Applications
  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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