This paper illustrates the relationship between quality improvement, reorder point, and lead time, as affected by backorder rate, in an imperfect production process. To reduce the total system cost by optimizing the setup cost, lot size, lead time, reorder point, and process quality parameter simultaneously, we first consider that the lead time demand follows a normal distribution, then we apply the distribution free approach for the lead time demand. We prove two lemmas which are used to find optimal solutions for the basic and distribution free models. We compare our models with the existing models using numerical examples and show that significant savings over the existing models can be achieved.
Bibliographical noteFunding Information:
The authors are grateful to Professor Cárdenas-Barrón and two anonymous referees for their useful comments on earlier versions of the paper. This work was supported by Research Settlement Fund for the new faculty of SNU (Seoul National University).
All Science Journal Classification (ASJC) codes
- Business, Management and Accounting(all)
- Economics and Econometrics
- Management Science and Operations Research
- Industrial and Manufacturing Engineering