Manufacturing lot size and product distribution problem with rework, outsourcing and discontinuous inventory distribution policy

Abstract

Product quality, timely delivery, and lower cost are critical operational goals to nowadays manufacturers, and company managements constantly seek different approaches to achieve these goals in order to stay competitive in turbulent global markets.This study investigates a practical manufacturing lot size and distribution problem with rework, outsourcing, and discontinuous inventory distribution policy.In real manufacturing environments, due to different controllable and/or uncontrollable factors, production of the nonconforming products is inevitable.Careful inspection into identifying nonconforming items and instant correction of the defects are considered in the proposed study.In additions, due to the limited production capacity in real manufacturing environments, sometimes, outsourcing can be used to cope with occasional unsteady demands, or running short of in-house capacity, to allow the management to maintain a smooth operation and/or shorten the production cycle length.Furthermore, in vendor-buyer integrated supply chains, multi-delivery policy is often considered for distributing finished products to customers.Motivated by the aforementioned practical situations, this study develops a mathematical model to explicitly investigate such a manufacturing lot-size and product distribution problem.Optimization techniques are employed to solve the problem and a numerical example is provided to show the applicability of our research results.

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