Abstract

This study uses mathematical modeling along with an algebraic technique to resolve the production-distribution policy for a single-producer multi-retailer integrated inventory system with scrap in production. We assume that a product is manufactured through an imperfect production process where all nonconforming items will be picked up and scrapped in each production cycle. After the entire lot is quality assured, multiple shipments will be delivered synchronously to m different retailers in each cycle. The objective is to determine the optimal replenishment lot size and optimal number of shipments that minimizes total expected costs for such a specific supply chains system. Conventional method is by the use of differential calculus on system cost function to derive the optimal policy (Chiu et al., 2012c), whereas the proposed algebraic approach is a straightforward method that enables practitioners who may not have sufficient knowledge of calculus to understand and manage more effectively the real-life systems.

Keywords:

Algebraic approach, inventory, multiple retailers, multiple shipments, production lot size, scrap, supply chains,

References

Competing interests

The authors have no competing interests.

Open Access Policy

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Copyright

The authors have no competing interests.