Optimal Determination of Purchaser’s Order Quantity and Producer’s Process Mean

Chung-Ho Chen; Chao-Yu Chou

doi:10.6180/jase.2012.15.1.05

Optimal Determination of Purchaser’s Order Quantity and Producer’s Process Mean

Computer Science and Information Engineering

Chung-Ho Chen This email address is being protected from spambots. You need JavaScript enabled to view it.¹ and Chao-Yu Chou²

¹Department of Management and Information Technology, Southern Taiwan University, Tainan, Taiwan 710, R.O.C.
²Department of Finance, National Taichung University of Science and Technology, Taichung, Taiwan, R.O.C.

Received: December 8, 2010
Accepted: November 28, 2011
Publication Date: March 1, 2012

Download Citation: ||https://doi.org/10.6180/jase.2012.15.1.05

ABSTRACT

Determination of optimum mean of the process characteristic is an important theme in quality improvement. Meanwhile, economic selection of order quantity is a key factor in inventory management since an inappropriate order quantity may result in unreasonably high inventory or stockout cost. In the present paper, we modify Chen and Liu’s model [8] to simultaneously determine the optimal purchaser’s order quantity and producer’s process mean by incorporating an asymmetric loss function. The solution procedure for this modified model is developed and numerical examples are given for illustration. Based on the sensitivity analyses, the common parameters having significant effects on the expected total profit of the system are the selling price per unit to the customer (R) and the mean demand of customer (μ_x). Therefore, accurate estimation of R and μ_x in order to obtain the optimal control on the order quantity and the maximum expected total profit of the system would be highly desired.

Keywords: Order Quantity, Process Mean, Asymmetric Quadratic Quality Loss Function, Uniform Distribution, Normal Distribution

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