Satisfy product demand with a quality assured hybrid EMQ-based replenishment system
AbstractWith the intention of minimizing operating cost and/or leveling limited production resources, managers of manufacturing firms usually fully assess diverse fabrication alternatives for meeting demand in their decision making processes. This study presents a quality assured hybrid economic manufacturing quantity (EMQ)-based replenishment system considering an outsourcing option, rework, and scrap. The objectives are to determine optimal lot-size for the proposed system and learn the in-depth characteristics of key system parameters. A precise model is cautiously built to portray the proposed system. Through mathematical analysis and optimization procedure, a close-form optimal lot-size is found. Using a numerical example, we further confirm applicability of the research result and demonstrate that crucial joint effects of various system variables on the optimal lot-size and on total system cost are obtainable.
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