Multi-item inventory policy with time-dependent pricing and rework cost
DOI:
https://doi.org/10.12928/ijio.v2i2.4370Keywords:
Inventory model, Time dependent pricing, Multi item, Rework costAbstract
The price of broiler chickens at the consumer level varies daily. The price can be very low or otherwise. The price has resulted from the imbalance between the availability of chicken from suppliers and the market demand. As a result, demand will also fluctuate because it is influenced by consumer purchasing power. When the price of live chickens is low, the carcass company will usually buy in large quantities and expect to sell them at a higher price. The problem arises when the chicken overstock company will risk product damage due to product buildup in the refrigerated warehouse, so rework is necessary. In this paper, we will be developed a multi-item inventory model that considers material prices that vary to time, probabilistic demand, and rework costs. The aim is to determine the right policy for controlling frozen chicken products' inventory to minimize losses and total inventory costs. This model can evaluate the best time to order broiler chickens, how much to order, how long the interval between orders, and the optimal number of orders, resulting in minimum total inventory cost per period. The model solution is carried out with an optimization approach based on the parameters that affect the model. A numerical example is given at the end of this paper for model validation and illustrates the model solving algorithm.References
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Badri, H.M., Khamis, N.K., & Ghazali, M.J. (2020). Integration of lot sizing and scheduling models to minimize production cost and time in the automotive industry. International Journal of Industrial Optimization, 1(1), 1-14.
Chen, W., Liu, H. & Xu, D. (2018). Dynamic Pricing Strategies for Perishable Product in a Competitive Multi-Agent Retailers Market. Journal of Artificial Societies and Social Simulation, 2(12).
Chenavaz, R. & Paraschiv C. (2018). Dynamic pricing for inventories with reference price effects. Economics Discussion Papers, No 2018-50.
Widiawati, I., Sumiati, T. & Hardyanti, P.I. (2020). Analisis Rantai Pasok Telur Ayam Ras pada Masa Pandemi Covid-19 pada Kelompok Usaha Peternakan Ayam Ras Petelur Gallus Jaya di Desa Setiawaras Kecamatan Cibalong Kabupaten Tasikmalaya. Prosiding Seminar Nasional Polbangtan Magelang, ISBN: 978-623-95866-03, 156-166.
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Khorasani, S.T., & Almasifard, M. (2017). An Inventory Model with Quantity Discount Offer Policy for Perishable Goods in the Two-Level Supply Chain. International Journal of Engineering and Technology, 9(4), 2828-2834.
Muhammad, R., & Arvianto, A. (2016). Implementasi Model Persediaan Probabilistik Multi Item dengan Mempertimbangkan Fluktuasi Permintaan dan Harga Barang (Studi Kasus: PT Purinusa Eka Persada). Industrial Engineering Online Journal, 4(1).
Taleizadeh, A.A., Kalantari, S.S., & Barrón, L.E.C. (2016). Pricing and lot sizing for an EPQ inventory model with rework and multiple shipments, TOP, 24, 143–155.
Islam, M.E., Uddin, M.S., & Ataullah, M. (2018). Stochastic Inventory Model with Reworks. Yugoslav Journal of Operations Research, 28(4), 567-578.
Utama, D.M., Wardani, D.P., Halifah, S.T., & Pradikta, D.C. (2019). Model Economic Production Quantity dengan Rework Process and Batasan Gudang, Jurnal Sistem dan Manajemen Industri, 3(1), 43-49.
Oktavia, N., Henmaidi, & Fithri, P. (2020). Pengembangan Model Economic Production Quantity Mengakomodasi Continue dan Discrete Demand serta Kebijakan Rework Secara Simultan. Inventory-Industrial Vocational e-Journal on Agroindustry, 1(1), 8-15.
Chiu, Y.S. Wu, M.F., Chiu, S., & Chang, H.H. (2015). A simplified approach to the multi-item economic production quantity model with scrap, rework, and multi-delivery. Journal of Applied Research and Technology, 13(4), 472-476.
Chiu, S.W., Tseng, C.T., Wu, M.F., & Sung, P.C. (2014). Multi-item EPQ model with scrap, rework and multi-delivery using common cycle policy. Journal of Applied Research and Technology, 12, 615-622.
Leuveano, R.A.C., Rahman, M.N.A., Mahmood, W.M.F.W., & Saleh, C. (2019). Integrated Vendor-Buyer Lot-Sizing Model with Transportation and Quality Improvement Consideration under Just-in-Time Problem. Mathematics, 7(10).
Rahman, M.N.A., Leuveano, R.A.C., Jafar, F.A.B., Saleh, C., Deros, B.M., Mahmood, W.M.F.W., & Mahmood, W.H.N.W. (2016). Incorporating Logistic Costs into a Single Vendor–Buyer JELS Model. Applied Mathematical Modelling, Elsevier, 40(23), 10809-10819.
Salamah, M.A. (2016). Economic Production Quantity in Batch Manufacturing with Imperfect Quality, Imperfect Inspection, and Destructive and Non-Destructive Acceptance Sampling in a Two-Tier Market. Computers & Industrial Engineering, 93, 275-285.
Bachman, (1986). Inventory Control with Price Fluctuations, International Journal of Operations & Production Management, 6(3), 58-64.
Zheng, M., Meng, Z., & Shen, R. (2020). Research on Two-Level Price-Fluctuation Supply Chain Ordering Strategy Problem. Discrete Dynamics in Nature and Society, 2020, Article ID 3867401.
Jenar, M., Sutopo, W., & Yuniaristanto. (2015). Pengembangan Model Game Theory Pada Skema Persediaan Penyangga Untuk Menjamin Ketersediaan dan Kestabilan Harga Komoditas Gula Pasir. Jurnal Teknik Industri, 10(2).
Arnold, J., Minner, S., & Eidam, B., (2009). Raw Material Procurement with Fluctuating Prices. International Journal of Production Economic, Elsevier, 121(2), 353-364.
Boer, A.D., Perry, O. & Zwart, B. (2017). Dynamic Pricing Policies for an Inventory Model with Random Windows of Opportunities. Naval Research Logistics, Wiley Periodicals, Inc.
Nobil, A.H., Sedigh, A.H.A., Tiwari, S., & Wee, H.M. (2019). An imperfect multi-item single-machine production system with shortage, rework, and scrap considering inspection, dissimilar deficiency levels, and non-zero setup times. Scientia Iranica E, 26(1), 557-570.
Goyal, S. K. (1984). Economic ordering policy for a product with periodic price changes. Proceeding Third International Symposium Inventory, Budapest, Hungry.
Goyal S. K., & Barron, L. E. C. (2002). Note on: Economic production quantity model for items with imperfect quality - a practical approach, International Journal of Production and Economic, 77 (2002), 85-87.
Taheri J., and Mirzazadeh, A. (2021). Optimization of Inventory System with Defects, Rework Failure and Two Types of Errors under Crisp and Fuzzy Approach. Journal of Industrial and Management Optimization, 68.
Saltelli, A., Ratto, M., Andres, T., Campolongo, F., Cariboni, J., Gatelli, D., Saisana, M., & Tarantola, S. (2008). Global Sensitivity Analysis: the primer. John Wiley.
Saltelli, A., & Annoni, P. (2010). How to avoid a perfunctory sensitivity analysis. Environmental Modelling & Software, 25(12):1508–1517.
Qian, G., & Mahdi, A. (2020, January, 12). Sensitivity analysis methods in the biomedical sciences. arXiv:2001.03965v1 [q-bio.QM]. https://arxiv.org/pdf/2001.03965.pdf.
Badri, H.M., Khamis, N.K., & Ghazali, M.J. (2020). Integration of lot sizing and scheduling models to minimize production cost and time in the automotive industry. International Journal of Industrial Optimization, 1(1), 1-14.
Chen, W., Liu, H. & Xu, D. (2018). Dynamic Pricing Strategies for Perishable Product in a Competitive Multi-Agent Retailers Market. Journal of Artificial Societies and Social Simulation, 2(12).
Chenavaz, R. & Paraschiv C. (2018). Dynamic pricing for inventories with reference price effects. Economics Discussion Papers, No 2018-50.
Widiawati, I., Sumiati, T. & Hardyanti, P.I. (2020). Analisis Rantai Pasok Telur Ayam Ras pada Masa Pandemi Covid-19 pada Kelompok Usaha Peternakan Ayam Ras Petelur Gallus Jaya di Desa Setiawaras Kecamatan Cibalong Kabupaten Tasikmalaya. Prosiding Seminar Nasional Polbangtan Magelang, ISBN: 978-623-95866-03, 156-166.
Perhimpunan Insan Perunggasan Rakyat Indonesia (PIPRI), Daerah Istimewa Yogyakarta. (2020). https://pinsarindonesia.com.
Khorasani, S.T., & Almasifard, M. (2017). An Inventory Model with Quantity Discount Offer Policy for Perishable Goods in the Two-Level Supply Chain. International Journal of Engineering and Technology, 9(4), 2828-2834.
Muhammad, R., & Arvianto, A. (2016). Implementasi Model Persediaan Probabilistik Multi Item dengan Mempertimbangkan Fluktuasi Permintaan dan Harga Barang (Studi Kasus: PT Purinusa Eka Persada). Industrial Engineering Online Journal, 4(1).
Taleizadeh, A.A., Kalantari, S.S., & Barrón, L.E.C. (2016). Pricing and lot sizing for an EPQ inventory model with rework and multiple shipments, TOP, 24, 143–155.
Islam, M.E., Uddin, M.S., & Ataullah, M. (2018). Stochastic Inventory Model with Reworks. Yugoslav Journal of Operations Research, 28(4), 567-578.
Utama, D.M., Wardani, D.P., Halifah, S.T., & Pradikta, D.C. (2019). Model Economic Production Quantity dengan Rework Process and Batasan Gudang, Jurnal Sistem dan Manajemen Industri, 3(1), 43-49.
Oktavia, N., Henmaidi, & Fithri, P. (2020). Pengembangan Model Economic Production Quantity Mengakomodasi Continue dan Discrete Demand serta Kebijakan Rework Secara Simultan. Inventory-Industrial Vocational e-Journal on Agroindustry, 1(1), 8-15.
Chiu, Y.S. Wu, M.F., Chiu, S., & Chang, H.H. (2015). A simplified approach to the multi-item economic production quantity model with scrap, rework, and multi-delivery. Journal of Applied Research and Technology, 13(4), 472-476.
Chiu, S.W., Tseng, C.T., Wu, M.F., & Sung, P.C. (2014). Multi-item EPQ model with scrap, rework and multi-delivery using common cycle policy. Journal of Applied Research and Technology, 12, 615-622.
Leuveano, R.A.C., Rahman, M.N.A., Mahmood, W.M.F.W., & Saleh, C. (2019). Integrated Vendor-Buyer Lot-Sizing Model with Transportation and Quality Improvement Consideration under Just-in-Time Problem. Mathematics, 7(10).
Rahman, M.N.A., Leuveano, R.A.C., Jafar, F.A.B., Saleh, C., Deros, B.M., Mahmood, W.M.F.W., & Mahmood, W.H.N.W. (2016). Incorporating Logistic Costs into a Single Vendor–Buyer JELS Model. Applied Mathematical Modelling, Elsevier, 40(23), 10809-10819.
Salamah, M.A. (2016). Economic Production Quantity in Batch Manufacturing with Imperfect Quality, Imperfect Inspection, and Destructive and Non-Destructive Acceptance Sampling in a Two-Tier Market. Computers & Industrial Engineering, 93, 275-285.
Bachman, (1986). Inventory Control with Price Fluctuations, International Journal of Operations & Production Management, 6(3), 58-64.
Zheng, M., Meng, Z., & Shen, R. (2020). Research on Two-Level Price-Fluctuation Supply Chain Ordering Strategy Problem. Discrete Dynamics in Nature and Society, 2020, Article ID 3867401.
Jenar, M., Sutopo, W., & Yuniaristanto. (2015). Pengembangan Model Game Theory Pada Skema Persediaan Penyangga Untuk Menjamin Ketersediaan dan Kestabilan Harga Komoditas Gula Pasir. Jurnal Teknik Industri, 10(2).
Arnold, J., Minner, S., & Eidam, B., (2009). Raw Material Procurement with Fluctuating Prices. International Journal of Production Economic, Elsevier, 121(2), 353-364.
Boer, A.D., Perry, O. & Zwart, B. (2017). Dynamic Pricing Policies for an Inventory Model with Random Windows of Opportunities. Naval Research Logistics, Wiley Periodicals, Inc.
Nobil, A.H., Sedigh, A.H.A., Tiwari, S., & Wee, H.M. (2019). An imperfect multi-item single-machine production system with shortage, rework, and scrap considering inspection, dissimilar deficiency levels, and non-zero setup times. Scientia Iranica E, 26(1), 557-570.
Goyal, S. K. (1984). Economic ordering policy for a product with periodic price changes. Proceeding Third International Symposium Inventory, Budapest, Hungry.
Goyal S. K., & Barron, L. E. C. (2002). Note on: Economic production quantity model for items with imperfect quality - a practical approach, International Journal of Production and Economic, 77 (2002), 85-87.
Taheri J., and Mirzazadeh, A. (2021). Optimization of Inventory System with Defects, Rework Failure and Two Types of Errors under Crisp and Fuzzy Approach. Journal of Industrial and Management Optimization, 68.
Saltelli, A., Ratto, M., Andres, T., Campolongo, F., Cariboni, J., Gatelli, D., Saisana, M., & Tarantola, S. (2008). Global Sensitivity Analysis: the primer. John Wiley.
Saltelli, A., & Annoni, P. (2010). How to avoid a perfunctory sensitivity analysis. Environmental Modelling & Software, 25(12):1508–1517.
Qian, G., & Mahdi, A. (2020, January, 12). Sensitivity analysis methods in the biomedical sciences. arXiv:2001.03965v1 [q-bio.QM]. https://arxiv.org/pdf/2001.03965.pdf.
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Published
2021-09-01
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Nafisah, L., Maharani, N. C. D., Astanti, Y. D., & Khannan, M. S. A. (2021). Multi-item inventory policy with time-dependent pricing and rework cost. International Journal of Industrial Optimization, 2(2), 99–112. https://doi.org/10.12928/ijio.v2i2.4370
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