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Math. Comput. Appl. 2016, 21(3), 38; doi:10.3390/mca21030038

Cost Minimization for a Multi-Product Fabrication-Distribution Problem with Commonality, Postponement, and Quality Assurance

1
Department of Business Administration, Chaoyang University of Technology, Taichung City 413, Taiwan
2
Department of Industrial Engineering & Management, Chaoyang University of Technology, Taichung City 413, Taiwan
3
Department of Accounting, Finance and Law, The State University of New York at Oswego, Oswego, NY 13126, USA
*
Author to whom correspondence should be addressed.
Academic Editor: Fazal Mahomed
Received: 3 July 2016 / Revised: 18 August 2016 / Accepted: 6 September 2016 / Published: 14 September 2016
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Abstract

To gain more competitive advantages and attract more customers from the turbulent business environment, manufacturing firms today must offer a wide variety of products to marketplaces. The existence of component commonality in multi-product fabrication planning enables managers to reevaluate different production design alternatives to lower overall production relevant costs. Motivated by assisting managers of manufacturing firms in gaining competitive advantages, maximizing machine utilization, and reducing overall quality and fabrication-distribution costs, this study explores a multi-product fabrication-distribution problem with component commonality, postponement, and quality assurance. A two-stage single-machine production scheme with the reworking of repairable nonconforming items is proposed. The first stage fabricates common intermediate components for all products, and the second stage produces and distributes end products under a common cycle time policy. Mathematical modeling and optimization techniques are utilized to derive the optimal fabrication-distribution policy that minimizes the expected total system costs of the problem. Finally, we provide a numerical example with sensitivity analyses to not only show practical uses of the obtained results, but also demonstrate that the proposed production scheme is beneficial in terms of cost savings and cycle time reduction as compared to that in a single-stage production scheme. The research results enable manufacturers to gain more competitive advantages in the turbulent global business environment. View Full-Text
Keywords: multi-product manufacturing system; component commonality; postponement; fabrication-distribution policy; quality assurance; multi-distribution; two-stage production; rework; scrap multi-product manufacturing system; component commonality; postponement; fabrication-distribution policy; quality assurance; multi-distribution; two-stage production; rework; scrap
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Chiu, S.W.; Kuo, J.-S.; Chiu, V.; Chiu, Y.-S.P. Cost Minimization for a Multi-Product Fabrication-Distribution Problem with Commonality, Postponement, and Quality Assurance. Math. Comput. Appl. 2016, 21, 38.

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Math. Comput. Appl. EISSN 2297-8747 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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