Buyer’s Order Quantity and Manufacturer’s Wholesale Price, Process Mean, and Production Run Length Settings  
Author Chung-Ho Chen




Abstract In this article, the author proposes a modified Chen and Liu’s mixed procurement policy with quality loss for the product and assumes that the quality characteristic of product is normally distributed. The used cost of customer for product is measured by adopting Taguchi’s symmetric quadratic quality loss function. A single sampling inspection plan is applied in determining the lot quality of manufacturer. The modified economic manufacturing quantity model will be considered for evaluating the manufacturer’s profit. The optimal buyer’s order quantity and manufacturer’s process mean, wholesale price, and production run length will be simultaneously determined by maximizing the expected total profit including the buyer and the manufacturer. Finally, the sensitivity analysis of the parameters will be provided for illustration.


Keywords Process Mean, Production Run Length, Quadratic Quality Loss Function, Single Sampling Inspection Plan
    Article #:  1941
Proceedings of the 19th ISSAT International Conference on Reliability and Quality in Design
August 5-7, 2013 - Honolulu, Hawaii, U.S.A.