OPTIMUM PROFIT MODEL FOR DETERMINING PURCHASER'S ORDER QUANTITY AND PRODUCER'S PROCESS MEAN

In this paper, the author presents a modified Chen and Liu's model for determining the optimum order quantity and process mean between the producer and the purchaser. Assume that purchaser's order quantity and producer's process mean are independent normally distributed. The numerical result shows that the sale price per unit and mean order quantity of purchaser have a major effect on the expected total profit of them. Taguchi's symmetric quadratic quality loss function is applied in measuring the product quality.