A two-warehouse inventory model with rework process and time-varying demand / Nurnadiah Nurhasril

Nurnadiah , Nurhasril (2021) A two-warehouse inventory model with rework process and time-varying demand / Nurnadiah Nurhasril. Masters thesis, Universiti Malaya.

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Abstract

It is commonly assumed that in a classical inventory model, all items produced during a production cycle are of perfect items. However, contradictory to reality, production processes are not perfect at all times, hence resulting in the production of defectives. In order to minimise the cost incurred and reduce wastage in a production process, we might consider a rework process to be implemented on the defective items. Besides that, most classical inventory models also consider the assumption that the available storage facility has an unlimited capacity. Conversely, in reality an additional storage space commonly known as a rented warehouse (RW) is needed to store excessive inventory. Another common assumption is that the demand rate is constant. However, contrary to reality the demand rate is known to fluctuate due to several factors such as trends and seasons. Therefore, in order to take into consideration all of the aforementioned common assumptions, we proposed a two-warehouse inventory model with deteriorating items and rework process with time varying demand rate. We also considered the Last-In-First-Out (LIFO) and the First-In-First Out (FIFO) policies with the assumption that the holding cost is higher in the rented warehouse as compared to the owned warehouse. The objective of the proposed model is to determine the optimum values of the time period in a cycle of stage i that will minimise the total relevant cost, TRC of a production cycle. This dissertation is divided into several sections, where we will discuss the mathematical formulation of the model followed by numerical example and a sensitivity analysis to illustrate the derived results.

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