Journal of Korean Institute of Industrial Engineers (대한산업공학회지)

Korean Institute of Industrial Engineers (대한산업공학회)
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Determination of Economic Inventory Quantity under Probabilistic Demands and Cancellation of Orders in Production System with Two Different Production Speeds

이중생산속도를 가지는 생산시스템에서 확률적인 수요와 주문취소를 고려한 경제적 재고량 결정

  • Lim, Si Yeong (Department of Industrial and Management Engineering, Hanyang University) ;
  • Hur, Sun (Department of Industrial and Management Engineering, Hanyang University) ;
  • Park, You-Jin (School of Business Administration, Chung-Ang University)
  • 임시영 (한양대학교 산업경영공학과) ;
  • 허선 (한양대학교 산업경영공학과) ;
  • 박유진 (중앙대학교 경영학부)
  • Received : 2012.11.16
  • Accepted : 2014.02.20
  • Published : 2014.06.15
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Abstract

We consider the problem to find economic inventory quantity of a single commodity under stochastic demands and order cancellation. In contrast to the traditional economic production quantity (EPQ) model, we assume that once the amount of inventory reaches to a predetermined level of quantity then the production is not halted but its production speed decreases until the inventory level drops to zero. We establish two probabilistic models representing the behaviors of both the high-production period and low-production period, respectively, and derive the relationship between the level of inventory and costs of production, cancellation, and holding, from which the quantity of economic inventory is obtained.

Keywords

References

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