• Journal of Institute of Control, Robotics and Systems
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• v.4 no.6
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• pp.802-810
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• 1998

The purpose of this study is to find the analytic solution of determining the optimal capacity of processes and storages to meet the product demand. Recent trend to reduce product delivery time and to provide high quality product to customer requires the increasing capacity of storage facilities. However, the cost of constructing and operating storage facilities is becoming substantial because of increasing land value, environmental and safety concern. Therefore, reasonable decision making about the capacity of processes and storages is important subject for industries. The industrial solution for this subject is to use the classical economic lot sizing method, EOQ(Economic Order Quantity) model, trimmed with practical experience but the unrealistic assumption of EOQ model is not suitable for the chemical plant design with highly interlinked processes and storages. This study, a first systematic attempt for this subject, clearly overcomes the limitation of classical lot sizing method. The superstructure of the plant consists of the network of serially and/or parallelly interlinked processes and storages. A novel production and inventory analysis method, PSW(Periodic Square Wave) model, is applied. The objective function of optimization is minimizing the total cost composed of setup and inventory holding cost. The advantage of PSW model comes from the fact that the model provide a set of simple analytic solution in spite of realistic description of material flow between process and storage. The resulting simple analytic solution can greatly enhance the proper and quick investment decision for the preliminary plant design confronting diverse economic situation.

• Journal of the Korean Operations Research and Management Science Society
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• v.39 no.1
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• pp.83-100
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• 2014

Retail shops often experience purchase dependence in which some items are purchased together by customers due to their unknown interior associations. This paper develops an inventory model considering partial backordering under purchase dependence and compares the performance of the inventory model that ignores purchase dependence. Computational analyses show that purchase dependence should be incorporated as an important factor of inventory replenishment policy because the impact of purchase dependence can be more significant as the lost portion of the unmet demand orders increases and the item set is more correlated in terms of order demand.

• Journal of the military operations research society of Korea
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• v.23 no.2
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• pp.72-84
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• 1997

In this paper, we consider an economic order quantity(EOQ) and an optimal discount pricing policy for the monopsony related to the weapon system acquisition. In the monopsony case, a buyer wishes to maximize the profit. However, a seller wants to minimize the total inventory related cost since a buyer can determine the purchase price for the product. We develop a generalized version of EOQ model for the monopsony, including one seller-one buyer model and two seller-one buyer model. A model of buyer reaction to any given pricing scheme is developed to show that there exits a unified pricing policy which motivates the buyer to increase its ordering quantity per order, thereby reducing the joint(buyer and seller) ordering and holding costs in the system.

• Journal of Korean Institute of Industrial Engineers
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• v.34 no.1
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• pp.32-41
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• 2008

This paper studies a joint EOQ and EPQ model in which a stationary demand can be satisfied by recycled products as well as newly purchased products. The model assumes that a fixed quantity of the used products are collected from customers and later recovered for reuse. The recovered products are regarded as perfectly new ones. We also assume that the number of orders for newly purchasing items and the number of recovery setups in a cycle can be mutually independent integers. Under these assumptions, we develop an optimization model obtaining the economic order quantity for newly procured products, the optimal lot size for the recovery process, and the sequence of the orders and the setups, simultaneously. And then a simple solution procedure to find a local optimal control parameter set is proposed. To validate the model and the solution procedure, finally, some computational experiments are presented.

• The Journal of the Convergence on Culture Technology
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• v.9 no.6
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• pp.257-262
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• 2023

As part of their marketing policy, some suppliers allow retailers a period of credit in anticipation of increasing demand for the products they supply. The opportunity to defer payments on products through credit transactions has the effect of reducing retailers' inventory investment costs, and as a result, retailers determine selling prices in anticipation of increased demand from buyers. This study aims to analyze the inventory model that determines the retailer's selling price and EOQ(Economic Order Quantity) under the assumption that the buyer's demand is an exponentially decreasing function of the retailer's selling price in the credit transaction supply chain consisting of suppliers, retailers, and buyers. The products supplied for problem analysis include the case of deteriorating products that deteriorate over time, and the effect of the credit transaction period, the index of price elasticity and the degree of deterioration on the retailer's selling price and EOQ is analyzed.

• Journal of Korean Institute of Industrial Engineers
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• v.4 no.1
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• pp.49-55
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• 1978

This paper presents a new method, called a modified economic order quantity method, for determining the optimal inventory policy, which uses the rate of return as its decision criterion. Especially for the simplest possible inventory system with constant demand rate, no backlogging, no lead time, etc., the formula for the optimal order policy is derived. Also mentioned are the relative merits and shortcomings of this method compared to the conventional EOQ model.

• International Journal of Advanced Culture Technology
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• v.9 no.3
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• pp.271-276
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• 2021

In this paper we analyze the effect of the credit period on inventory policy under trade credit with ordering cost including a fixed cost and freight cost, where the freight cost has a quantity discount. For marketing purposes, some supplier offers credit period to his buyer to stimulate the demand for the product he produces. The delay in payments during the credit period has the effect of reducing the buyer's capital opportunity cost. It is also assumed that the buyer pays the freight cost for the order and hence, the ordering cost consists of a fixed ordering cost and a variable freight cost which depends on the order quantity. As a result, the possibilities of trade credit and discounts on freight costs are expected to play an important role in the buyer's inventory policy. Based on the economic order quantity inventory model, we analyze how the buyer can determine the optimal inventory policy and we examine the effect of the length of credit period on the buyer's inventory policy.

• Journal of Institute of Control, Robotics and Systems
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• v.7 no.10
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• pp.867-873
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• 2001

The purpose of this study is to find analytic solution of determining the optimal capacity (lot-size) of multiproduct acyclic multistage production and inventory system to meet the finished product demand under the constraint of finite intermediate storage. Intermediate storage is a practical way to mitigate the material flow imbalance through the line of supply and demand chain. However, the cost of constructing and operating storage facilities is becoming substantial because of increasing land value, environmental and safety concern. Therefore, reasonable decision-making about the capacity of processes and storage units is an important subject for industries. The industrial solution for this subject is to use the classical economic lot sizing method, EOQ/EPQ(Economic Order Quantity/Economic Production Quantity) model, incorporated with practical experience. But EOQ/EPQ model is not suitable for the chemical plant design with highly interlinked processes and storage units because it is developed based on single product and single stage. This study overcomes the limitation of the classical lot sizing method. The superstructure of the plant consists of the network of serially and/or parallelly interlinked non-continuous processes and storage units. The processes transform a set of feedstock materials into another set of products with constant conversion factors. A novel production and inventory analysis method, PSW(Periodic Square Wave) model, is applied to describe the detail material flows among equipments. The objective function of this study is minimizing the total cost composed of setup and inventory holding cost. The advantage of PSW model comes from the fact that the model provides a set of simple analytic solutions in spite of realistic description of the material flows between processes and storage units. the resulting simple analytic solution can greatly enhance the proper and quick investment decision for the preliminary plant design problem confronted with economic situation.

• Journal of Institute of Control, Robotics and Systems
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• v.20 no.7
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• pp.750-755
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• 2014

Product shortage which causes backordering and/or lost sales cost is very popular in chemical industries, especially in commodity polymer business. This study deals with backordering cost in the supply chain optimization model under the framework of process-inventory network. Classical economic order quantity model with backordering cost suggested optimal time delay and lot size of the final product delivery. Backordering can be compensated by advancing production/transportation of it or purchasing substitute product from third party as well as product delivery delay in supply chain network. Optimal solutions considering all means to recover shortage are more complicated than the classical one. We found three different solutions depending on parametric range and variable bounds. Optimal capacity of production/transportation processes associated with the product in backordering can be different from that when the product is not in backordering. The product shipping cycle time computed in this study was smaller than that optimized by the classical EOQ model.

• Journal of the Korean Operations Research and Management Science Society
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• v.22 no.4
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• pp.93-113
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• 1997

In studying an EOQ-like inventory model for a manufacturing process, a number of findings were made. The system can "go out of control" resulting in a relatively minor problem state or "break-down". When the production system is in the minor problem statei produces a number of defective items. It is assumed that each defective piece requires rework cost and related operations. Once the machine breakdown takes place, the production system produces severely defective items that are completely unusable. Each completely unusuable item is immediately discarded and incurs handling cost, scrapped raw material cost and related operations. Two investment options in improving the production process are introduced : (1) reducing the probability of machine breakdown, breakdowns, and (2) simultaneously reducing the probability of machine breakdowns and setup costs. By assuming specific forms of investment cost function, the optimal investment policies are obtained explicitly. Finally, to better understand the model in this paper, the sensitivity of these solutions to changes in parameter values and numerical examples are provided.amples are provided.