Track: Production Planning and Management

Abstract

Process deterioration is a leading cause of mediocre production plan adherence and hence not satisfying customers' demand. Process setup and quality improvement are two common factors that return the production system to its designated status. The proposed research integrates production control, capital investment, and quality control aspects to enhance the reliability and productivity of the production-inventory system. To achieve this goal, a mathematical model is formulated to decide the optimal production run length (OPRL), cost of setup, and cost of process quality improvement. It is assumed that the production process starts in an in-control state with a fixed defective rate and may shift to an out-of-control state with a linear increase of defective rate. A numerical example is provided to demonstrate model practicability and to derive managerial insights. For instance, investment in setup cost reduction and quality improvement can achieve a 61.07% reduction in the total cost.