Quasi-optimal single-vendor single-buyer strategies with imperfect production process

This paper deals with the integrated supply chain management problem in the context of a single vendor-single buyer system for which the production unit is assumed to randomly shift from an in-control to an out-of-control state. Two different strategies, integrating production, shipment and maintenance policies, are proposed and compared to satisfy the buyers order at a minimum total cost rate. The first strategy is based on a classical production policy for which the buyer's order of size nQ is manufactured continuously and shipped by lots of size Q. The second strategy suggests that the same buyer's order should be produced and shipped separately by equal sized lots Q. For both strategies, a corrective or preventive maintenance action is performed at the end of each production cycle, depending on the state of the production unit, and a new setup is carried out. The total integrated average cost per time unit is considered as the performance criterion allowing choosing the best policy for any given situation.