Innovative maintenance problem in a two-stage production-inventory system with imperfect processes

The specification of a product is frequently changed to satisfy new requirement from market buyers. To maintain market competitiveness, manufacturers must plan innovative production and sale strategies to achieve maximum benefit. This activity is known as innovative maintenance (IM). In this paper, we therefore consider a two-stage production-inventory model with replacement and imperfect component processes during which the components replacement is a common issue of IM. We then find the optimal production and sale strategies that minimize the total cost per unit time. An algorithm is proposed to find these optimal solutions. Finally, we quote two numerical examples from the Taiwan polyurethane industry to illustrate the proposed model and algorithm. Sensitivity analysis is also performed to obtain some managerial insights.