Integrating a cost reduction delivery policy into an imperfect production system with repairable items

This paper integrates a cost reduction delivery policy into an imperfect production system with repairable items for the purpose of lowering producer’s stock holding cost. The present paper reexamines a manufacturing lot-size problem studied by a prior paper, and improves its production batch size solution in terms of lowering its inventory holding cost. An n+1 delivery policy is proposed here in lieu of n multi-delivery plan used by the prior paper. Under such a policy, an initial (additional) installment of finished products is shipped to customer within the production uptime for satisfying product demand during producer’s regular production and rework times. Fixed quantity n installments of finished items are then distributed to customer at a fixed interval of time, at the end of rework. Mathematical modeling and analyses are employed in this study. As a result, the optimal replenishment lot size solution is derived. A numerical example is provided to show its practical usage as well as its significant savings in stock holding cost.