Integration of economic production quantity with defective items for multi-product in multi-period

Abstract

Manufacturers often face material losses during the process of any specific production assemblies which are usually unpredictable. However, the attrition percentage can normally be obtained. In order to make sure that the demand is met despite attrition, the production needs to be planned wisely. Inefficient production planning can lead to the consumption of capital resources that can otherwise be put into better use elsewhere in the company. In this study, an inventory model that takes attrition into consideration with no shortage allowed is developed. An Economic Production Quantity with Attrition (EPQA) model is used to obtain the optimal production run size and the optimal production cycle. Then, an aggregate planning model for five periods of time is developed taking the optimal production run size obtained as the demand. This model will help the decision making process by determining the production quantity of products, use of overtime labor, number of workers to be hired or fired and the amount of inventory to be held in stock each period so that the demand is met and the annual total cost of operations is kept to the minimum. This new production policy can thus scientifically address the attrition problem, assist in decision making, help in resource planning and optimize the production process. For future study, the attrition could be included as an inherent parameter in material or inventory planning to make sure that required materials are sufficient to satisfy demands even when attritions exist.