Optimal lot-sizing policy for a failure prone production system with investment in process quality improvement and lead time variance reduction

<p style='text-indent:20px;'>To survive in today's competitive market, it is not enough to produce low-cost products but also quality-related issues and lead time needs be considered the decision-making process. This paper extends previous research by developing a stochastic economic manufacturing quantity (EMQ) model for production system which subject process shifts from an <i>in-control</i> state <i>out-of-control</i> at any random time. Moreover, we consider option of investment increase quality decrease lead-time variability. Closed-form solutions proposed models are obtained applying classical optimization technique. Some lemmas theorems developed determine optimal solution decision variables. Numerical results each these compared with those basic <i>EMQ</i> without investment. From numerical analysis, has been observed that our can significantly reduce cost model.</p>