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Optimal Replenishment and Rework with Multiple Unreliable Supply Sources
Jinfa Chen, David D. Yao and Shaohui Zheng
Vol. 49, No. 3 (May - Jun., 2001), pp. 430-443
Published by: INFORMS
Stable URL: http://www.jstor.org/stable/3088638
Page Count: 14
You can always find the topics here!Topics: Unit costs, Optimal solutions, Cost efficiency, Order quantity, Purchasing, Supply, Surplus, Cost functions, Premiums, Greedy algorithms
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We study a production-inventory system with multiple unreliable supply sources. Through inspection and rework, the system can improve the quality of the units received from the supply sources. There are two interleaved decisions: the replenishment quantities from the sources and the inspection-rework quantities among the units received. We show the optimal solution to the replenishment decision can be efficiently derived from a greedy algorithm, and inspection-rework is optimally applied to a single source identified by the algorithm. Furthermore, in the case of linear cost functions, it is optimal to place orders from two supply sources, i.e., dual sourcing. The results extend to the infinite-horizon case, where an order-up-to policy is optimal. The model also readily adapts to situations in which the supply imperfection takes the form of a reduced delivery quantity (yield loss).
Operations Research © 2001 INFORMS