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An EPQ inventory model considering an imperfect production system with probabilistic demand and collaborative approach

Katherinne Salas-Navarro (Department of Industrial Management, Agroindustry and Operations, Universidad de la Costa, Barranquilla, Colombia)
Jaime Acevedo-Chedid (Department of Industrial Engineering, Universidad Tecnológica de Bolívar, Cartagena, Colombia)
Gina Mora Árquez (Department of Industrial Engineering, Universidad Tecnológica de Bolívar, Cartagena, Colombia)
Whady F. Florez (Grupo de Investigación en Energía y Termodinámica, Universidad Pontificia Bolivariana, Medellín, Colombia)
Holman Ospina-Mateus (Department of Industrial Engineering, Universidad Tecnológica de Bolívar, Cartagena, Colombia)
Shib Sankar Sana (Department of Mathematics, Kishore Bharati Bhagini Nivedita College, Kolkata, India)
Leopoldo Eduardo Cárdenas-Barrón (Department of Industrial and Systems Engineering, School of Engineering and Sciences, Tecnológico de Monterrey, Monterrey, Mexico)

Journal of Advances in Management Research

ISSN: 0972-7981

Article publication date: 25 November 2019

Issue publication date: 23 March 2020

Abstract

Purpose

The purpose of this paper is to propose an economic production quantity (EPQ) inventory model considering imperfect items and probabilistic demand for a two-echelon supply chain. The production process is imperfect and the imperfect quality items are removed from the lot size. The demand rate of the inventory system is random and follows an exponential probability density function and the demand of the retailers is depending on the initiatives of the sales team.

Design/methodology/approach

Two approaches are examined. In the non-collaborative approach, any member of the supply chain can be the leader and takes decisions to optimize the profits, and in the collaborative system, all members make joint decisions about the production, supply, sales and inventory to optimize the profits of the supply chain members. The calculus approach is applied to find the maximum profit related to the members of the supply chain.

Findings

A numerical example is presented to illustrate the performance of the EPQ model. The results show that collaborative approach generates greater profits to the supply chain and the market’s demand represents the variable behavior and uncertainty that is generated in the replenishment of a supply chain.

Originality/value

The new and major contributions of this research are: the inventory model considers demand for products is random variable which follows an exponential probability distribution function and it also depends on the initiatives of sales teams, the imperfect production system generates defective items, different cycle time are considered in manufacturer and retailers and collaborative and non-collaborative approaches are also studied.

Keywords

Citation

Salas-Navarro, K., Acevedo-Chedid, J., Árquez, G.M., Florez, W.F., Ospina-Mateus, H., Sana, S.S. and Cárdenas-Barrón, L.E. (2020), "An EPQ inventory model considering an imperfect production system with probabilistic demand and collaborative approach", Journal of Advances in Management Research, Vol. 17 No. 2, pp. 282-304. https://doi.org/10.1108/JAMR-07-2019-0141

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited