A generalized geometric-programming solution to “An economic production quantity model with flexibility and reliability considerations” |
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Authors: | Kit-Nam Francis Leung |
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Institution: | Department of Management Sciences, City University of Hong Kong, 83 Tat Chee Avenue, Kowloon Tong, Hong Kong |
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Abstract: | The classical economic production quantity (EPQ) model assumes that items are produced by a perfectly reliable production process with a fixed set-up cost. While the reliability of the production process cannot be perfected cost-free, the set-up cost can be reduced by investment in flexibility improvement. In this paper, we propose an EPQ model with a flexible and imperfect production process. We formulate this inventory decision problem using geometric programming (GP), establish more general results using the arithmetic-geometric mean inequality, and solve the problem to obtain a closed-form optimal solution. Following the theoretical treatment, we provide a numerical example to demonstrate that GP has potential as a valuable analytical tool for studying a certain class of inventory control problems. Finally we discuss some aspects of sensitivity analysis of the optimal solution based on the GP approach. |
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Keywords: | Geometric programming Flexibility Quality Reliability Process improvement |
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