The Joint Determination of Optimum Process Mean and Economic Order Quantity

Chung-Ho Chen

doi:10.6180/jase.2011.14.4.03

The Joint Determination of Optimum Process Mean and Economic Order Quantity

Computer Science and Information Engineering

Chung-Ho Chen This email address is being protected from spambots. You need JavaScript enabled to view it.¹

¹Department of Management and Information Technology, Southern Taiwan University, Tainan 710, Taiwan, R.O.C.

Received: July 29, 2010
Accepted: May 2, 2011
Publication Date: December 1, 2011

Download Citation: ||https://doi.org/10.6180/jase.2011.14.4.03

ABSTRACT

In Chen and Liu’s [1] model with traditional production system, they neglected the effect of product quality on the retailer’s order quantity. Their model only considered the order quantity obeying the uniform distribution. In fact, the retailer’s order quantity is concerned with product quality. Chen and Liu’s [1] model with simple manufacturing cost did not consider the used cost of customers. Hence, the modified Chen and Liu’s [1] model should be addressed for determining the optimal process parameter. In this study, the author proposes a modified Chen and Liu’s [1] model with quality loss and single sampling inspection plan. Assume that the retailer’s order quantity is concerned with the manufacturer’s product quality and the quality characteristic of product is normally distributed. Taguchi’s symmetric quadratic quality loss function is applied in evaluating the product quality. The optimal retailer’s order quantity and the manufacturer’s process mean will be simultaneously determined by maximizing the expected total profit of society including the manufacturer and the retailer.

Keywords: Economic Order Quantity, Process Mean, Taguchi’s Quadratic Quality Loss Function

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