Abstract
The classical economic production quantity (EPQ) model assumes that items are produced by a perfectly reliable production process with a fixed set-up cost. While the reliability of the production process cannot be perfect without a price, its set-up cost can be reduced with investment in flexibility improvement. An EPQ model with a flexible and imperfect production process is proposed in this paper. This inventory optimization problem is then formulated as a geometric program (GP) and solved to obtain closed-form optimal solutions. After the theoretical treatment, a numerical example is provided to illustrate how the GP theories are applied to solve a given problem. Finally some aspects of post-optimality sensitivity analysis based on the GP approach are discussed.
Original language | English |
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Pages (from-to) | 174-179 |
Number of pages | 6 |
Journal | European Journal of Operational Research |
Volume | 39 |
Issue number | 2 |
DOIs | |
Publication status | Published - 24 Mar 1989 |
Externally published | Yes |
Keywords
- geometric programming
- Inventory
ASJC Scopus subject areas
- Modelling and Simulation
- Management Science and Operations Research
- Information Systems and Management