Determining the Economic Manufacturing Lot Size with Expedited Fabrication Rate and Product Quality Assurance

Abstract

Operations in manufacturing environments are turbulent. Thus, production managers must be capable of dealing with diverse and unexpected situations, such as either random production of imperfect items or unanticipated changes in customers’ orders. Therefore, a decision-support-type of model is required to facilitate production managers in achieving their goals. We propose a precise model that can determine the economic lot size (ELS) by incorporating issues related to expedited fabrication rate and product quality-assurance during production. Thereby, fabrication rate can be adjusted with an extra setup and the consequent unit costs. In each fabrication cycle, random non-conforming products would be screened and identified. Such items would either be disposed of or reworked with consequent extra cost, to obtain a quality-assured final product. The ELS is determined with the aid of mathematical analyses and optimization processes. A numerical example is presented to demonstrate the applicability of our model and to depict diverse critical system characteristics that support managerial decision-making.