Quasi-optimal integrated production, inventory and maintenance policies for a single-vendor single-buyer system with imperfect production process

Abstract

In this paper we deal with the integrated supply chain management problem in the context of a single vendor-single buyer system for which the production unit is assumed to randomly shift from an in-control to an out-of-control state. At the end of each production cycle, a corrective or preventive maintenance action is performed, depending on the state of the production unit, and a new setup is carried out. Two different integrated production, shipment and maintenance strategies are proposed to satisfy the buyer’s demand at minimum total cost. The first one suggests that the buyer orders batches of size nQ and the vendor produces nQ and makes equal shipments of size Q. The second policy proposes that to satisfy the same ordered quantity, the vendor produces separately smaller batches of size Q, n times. The total integrated average cost per time unit corresponding to each strategy is considered as the performance criterion allowing choosing the best policy for any given situation.