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Optimal Imperfect-Quality Inventory Models for Continuous and Discrete Shipping with Process Improvement and Setup Reduction  

Kim, Dae-Soo (고려대학교 경영대학 경영학과)
Yoo, Seung-Ho (고려대학교 일반대학원 경영학과)
Publication Information
Journal of the Korean Operations Research and Management Science Society / v.34, no.1, 2009 , pp. 11-28 More about this Journal
Abstract
Intelligent investment in setup cost reduction and process reliability improvement is crucial to an emerging integrated lean six sigma practice today. This study examines a cost-minimizing problem of jointly determining production lot size, setup cost reduction, and process reliability improvement decisions for a manufacturer with an imperfect production process. We develop models for previously untapped discrete shipping in a supply chain context as well as continuous shipping and solve them optimally using differential calculus and nonlinear programming. We also conduct analytic and numerical sensitivity analyses to provide various important managerial insights into practices.
Keywords
Inventory; Imperfect Process; Process Reliability Improvement; Setup Reduction; Lean Six Sigma;
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