Journal of Applied Science and Engineering

Published by Tamkang University Press

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Optimum Settings of Process Mean, Economic Order Quantity, and Commission Fee

 2012

 Volume 15, Issue 4

Chung-Ho Chen1, Chao-Yu Chou2 and Wei-Chen Lee1

1Graduate Institute of Industrial Management, Southern Taiwan University of Science and Technology, Tainan 710, Taiwan, R.O.C.

2Department of Finance, National Taichung University of Science and Technology, Taichung, Taiwan, R.O.C.

Received: February 20, 2012
Accepted: June 26, 2012 Published: December 1, 2012

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In the present paper we modify Chen and Liu’s model by considering both consignment policy and quality loss of products[cite: 4]. Taguchi’s quadratic quality loss function is adopted for evaluating the product quality[cite: 4]. The optimal parameters of manufacturer’s process mean and commission fee and retailer’s economic order quantity are simultaneously determined by maximizing the expected total profit of society[cite: 4]. A comparative study between the modified model and the original Chen and Liu’s model is provided for illustration[cite: 4]. Numerical results show that the selling price per unit and the mean of the demand of customer have major effects on the expected profit of the supply chain system[cite: 4].

Keywords: Economic Order Quantity, Commission Fee, Taguchi’s Quadratic Quality Loss Function, Process Mean, Consignment Policy[cite: 4]

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