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Research Scholar, Department of Statistics, Andhra University, Visakhapatnam, Andhra Pradesh, India
ABSTRACT
This paper deals with economic production quantity model having Weibull rate of production and
deterioration. Here it is assumed that the demand is a function of selling price. The Weibull rate of production includes
constant/increasing/decreasing rates of production with suitable cost considerations the total cost function is derived.
The total profit rate function per unit time is also obtained. By maximizing the profit rate function under shortages,
which are allowed and fully backlogged, the optimal production quantity, selling price and optimal production schedules
are derived. The sensitivity of the model with respect to the parameters and costs is also studied. It is observed that the
that the deterioration distribution parameters are influencing the optimal values and production quantity. This model is
extended to the case of without shortages. This model also includes some of the earlier models as particular cases.
KEYWORDS: Random Production, Stochastic Inventory, Weibull Distribution, Stochastic Production Economic
Quantity Model
Original Article
random production has significant influence on optimal production schedules and selling price. It is further observed
Received: Apr 27, 2016; Accepted: May 07, 2016; Published: May 10, 2016; Paper Id.: IJMCARJUN201602
INTRODUCTION
Recently much emphasis is given for analyzing stochastic production economics quantity models. In
these models it is assumed that the production quantity is random and follows a probability distribution. This
random phenomenon of production is much closure to reality in some of the production processes, such as
chemical and cement industries and sea food industries. In many production processes it is random due to
influence of various random factors such as availability of raw material, supply of power, skill level of man power
and transportation. K. Srinivasa Rao et.al (2009) have studied the stochastic production model for deteriorating
items having additive exponential lifetime and selling price dependent demand rate. Noble and Vander Heeden
(2000) have developed stochastic production model with two discrete rates of production. Perumal and
Arivarignam (2002) have studied EPQ model with two rates of production for different times. Sen and
Chakrabarthy (2007) have studied order level inventory model with alternative rates of production. Uma
Maheswara Rao et.al (2010) have studied EPQ model with alternative rates of production, derived from these
methods. Sridevi et.al (2010) and K. Srinivas Rao et.al (2011) have studied the stochastic production economic
order quantity model for deteriorating items with Weibull rate of production. They assumed that the rate of
deterioration is constant. Laskhman Rao et.al (2015 and 2016) have studied stochastic production economic
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10
quantity models with Weibull rate of replenishment and generalized pareto decay. They assumed that the life time of the
commodity is random and follows a generalized pareto distribution. As a result of it, the instantaneous state of deterioration
is increasing of function of time, but in some commodities (products) the life time may not have increasing instantaneous
state of deterioration and may decrease or increase or constant.
Hence to have a generic stochastic production economic quantity models it needed to have a Weibull rate of
deterioration. Very little work has been reported in literature regarding stochastic production economic quantity model with
Weibull rate of deterioration. The Weibull rate of production includes increasing/decreasing/ constant production rates.
This paper addresses this problem by considering further development and analyzing stochastic quantity model
with Weibull rate of production and deterioration. Here it is assumed that the demand is a function of selling price.
Using differential calculus the instantaneous state of inventory during the production cycle is derived with the
assumptions that shortages are allowed and fully back logged. With suitable cost considerations, the optimal values of
production schedule such as production uptime and downtime are derived. The numerical illustration is presented for
studying the effect of changing parameters and cost of optimal policies. This model is extended to the case of without
shortages.
2.2 Assumptions
For developing the stochastic production economic quantity model we consider the following assumptions:
The production is random and follows a Weibull distribution having probability density function of the form
; > 0, > 0, t >
f(x) = t-1
(1)
( )
( )
(2)
This production rate includes increasing /decreasing /constant rate of production for specific values of the
parameter .
11
The life time of the commodity is random and follows a three parameter Weibull distribution having probability
density function of the form
>
(3)
(4)
Deterioration starts only after the time period . This deterioration rate includes increasing/decreasing/constant rates of
Demand is a function of selling price and it is of the form (t,s) = (u-vs), where u>0, v0, this includes
increasing/decreasing/constant rates of demand.
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12
Let I(t) denote the inventory level of the system at time t 0 t T. The differential equations describing the
instantaneous states of I(t) in the interval (0,T) are:
( )=
( )+
( )!
( )+
( )=
( )!
( ) = (
);0<t
( ) = (
(5)
(
(6)
); t1 < t t2
); t2 < t t3
( )=
); < t t1
(7)
(8)
); t3 < t T
(9)
( )=
( )=e
(
)#
(/ )
( )=(
( )=(
) ;0<t
$% &'
{%/ 2(
)(
(10)
)e(/
) ; t2 < t t3
)(4 )
)(
)#
dt}; t1< t t2
(4
)* + [
) ]- ; <t t1
(11)
(12)
(13)
); t3 < t T
(14)
L(t)= %5
)* ( ); 0 < t t2
(15)
This Implies
6( ) =
:
8
9
8
7
) [
) =
+[
(
)#
)#
[% '
(
<
&% 2(
) ]]];
)
)#
)(
* )> ;
)#
<
(16)
L(T) =
(17)
+4
(18)
)(
A)
(19)
I(t A ) = (
13
)(T t A ) (T t A )
(20)
On equating equations (19) and (20) and on simplification, we get t2 in terms of t3 as,
t2 = T +
(D EF)
4 H= y (say)
(21)
Let K (t1, t2, t3,s) be the expected total cost per unit. Since the total cost is the sum of the set up cost per unit time,
purchasing cost per unit time, holding cost per unit time and shortage cost per unit time, thus K (t1, t2,t3, s)
becomes
K (t1,t2,t3,s)= +
I
J
KL
J
+ &%5 ( )* + %
J
M
( )* + %
( )* ) + & %
J
O
( )* %
( )* )
(22)
Substituting the values of ( )and Q, given in equations, (10) to (14) and (18) in equation (22), we get
K Gt , t 3 , t A , sH =
+ % N &e
/
(/ )
?+ &%/2 &e
/N
V
W
$% [t
(/ )
(u vs)]e(/
dt-)) dt)
dt + [ (u vs)]-) dt
(23)
Let P (t1,t2,t3,s) be the expected profit rate function. Since the expected profit rate function is the total revenue per
unit time minus expected total cost per unit time, we have
T
V
W
+ % N &e
/
(/ )
?+ &%/2 &e
/N
$% [t
(u vs)]e(/
(/ )
dt-)) dt)
dt + [ (u vs)]-) dt
+ % N =e
?+ % 2 e
N
)#
)#
&`%
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+ 4
(u vs)e(g
+ ^ i(u vs) d 3 (
O
) ^ + 'G
3)
)#
dz- * )
)#
H( + ^_`
M
J
aN
(24)
dzc + G (u vs)H)> dt
cej?
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14
= =
J aN
b
aN
(4
> 4
A )> +(u
vs) &4(4
A)
J2
3
c)[k
(25)
Substituting the values of t2 given in equation (21) in equation (25), we obtain the expected profit rate function as,
) & + 'Gt + T t A H(? +
P (t , t A, s) = (
+ % N e
/
?+ %n e
/N
(/ )
(/ )
&`% z
/
{%/ (
n
) iT +
+ pq(
U
vt 3A + dT + (r
3
?+(
st)
)e(l
(r st)
)e(l
dz} dt)
U2
3
/P 2
3
UaN
b
aN
b
dzc + (
Gt A T H dt A T
Gt A T He w & `
) &T(T t A ) `
^_`
`/P U c
(r st)
/P aN
b
c d(
)) dt
) e[?
2
3
eju?
c T (T t A ))
c)[k
(26)
(27)
where, D is the determinant of Hessian Matrix.
Differentiating P (t1, t3, s) given in equation (26) with respect to t1and equating it to zero, we get
-& 't
V
(? + 'e
W
(/N )
'Gt H(?
(28)
Differentiating P (t1, t3, s) given in equation (26) with respect to t3and equating it to zero, we get
= 't A ( + (0) + =(
V
) =T
U/P
xN
(r st)
+ (r
st)
'( + 1)t A T (?
`(r
st)
c 2Gt A T Ht A
? 't + T + (
A
t A + (T + (r
st)
)(t A T)()>[ = 0
15
Gt A T H {(D
/P
xN
EF)
|
(29)
Differentiating P (t1,t3,s) given in equation (26) with respect to s and equating it to zero, we get
( 2
) _ &v
+ _v &t A
U
/P 2
3
2
3
+ % N e
/
(/ )
&% ve(l
GT(T t A )H + `
U
3
U2
3
/P 2
3
dz) dt + % N e
/
c)[ = 0
(/ )
vdt + %/ e
n
(/ )
G %/ v e(l
n
dzHdt)[
(30)
Solving the equations (28) to (30) simultaneously, we obtain the optimal time at which the production is to be
stopped i.e., t1* of t1 and optimal time t3* of t3, the optimal time at which the production should be restarted after
accumulation of backorders and the optimal selling price s* of s. By substituting the optimal values of t1*and t3*,in
equation(18) we get the optimal value of Q as, Q*= (
+4
(31)
5 NUMERICAL ILLUSTRATION
In this section, we discuss the solution procedure of the model through a numerical illustration by obtaining the
production uptime, production downtime, optimal selling price, optimal ordering quantity and expected profit rate of an
EPQ model. Here, it is assumed that the commodity is of deteriorating nature and shortages are allowed and fully
backlogged. For demonstrating the solution procedure of the model the production parameter is considered to vary
between 105 to 108, the values of the other parameters and costs associated with the model are:
v= 0.50, 0.51, 0.52, 0.53; = 0.50, 0.51, 0.52; s =35, 34, 35, 36; u = 50, 50.1, 50.2, 50.3;
A= 3000, 3025, 3050, 3075; C =12, 12.5, 13;
~ = 0.51, 0.52, 0.53; = 0.21, 0.22, 0.23; = 0.50, 0.55, 0.60, 0.65; T=12 months;
Substituting these values in (28), (29) and (30) and solving them we get, the optimal ordering quantity Q*,
production uptime, production downtime, optimal selling price and expected total profit. These optimal values are
presented in Table 1
From Table 1 it is observed that the deterioration parameters and production parameters have a tremendous
influence on the optimal production downtime, optimal production uptimes, optimal ordering quantity and expected profit
rate function. If the ordering cost A increases from 3000 to 3075, the optimal ordering quantity Q* decreases from
221.454 to 220.317, the optimal production downtime t1*decreases from 1.891 to 1.870, the optimal production uptime t3*
increases from 7.454 to 7.472, the optimal selling price s* is increasing from 30.343 to 30.483 and the expected profit rate
P* decreases from 576.849 to 574.302. When the cost per unit C increases from 12 to 13, there is an increase in optimal
ordering quantity Q*, it increases from 221.454 to 223.677, the optimal production downtime t1* increases from 1.891 to
1.893 the optimal production uptime t3* decreases from 7.454 to 7.343, the optimal selling price s* is increasing from
30.343 to 30.890 and the expected profit rate P* decreases from 576.849 to 572.161. If the production parameter
increases from 105 to 108, there is an increase in optimal ordering quantity Q* from 221.454 to 225.558, the optimal
production downtime t1* decreases from 1.891 to 1.843, the optimal production uptime t3* increases from 7.454 to 7.470,
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the optimal selling price s* is increasing from 30.343 to 30.473 and the expected profit rate P* decreases from 576.849 to
574.716. When is increasing from 0.50 to 0.52 there is an decrease in optimal ordering quantity Q* from 221.454 to
220.963, the optimal production downtime t1* decreases from 1.891 to 1.587, the optimal production uptime t3* decreases
from 7.454 to 7.382, the optimal selling price s* is decreasing from 30.343 to 29.892 and the expected profit rate P* is
decreasing from 576.849 to 568.922. The deterioration parameter increases from 0.5 to 1.9, there is an decrease in
optimal ordering quantity Q* from 221.454 to 221.412, the optimal production downtime t1*increases from1.891 to 1.896,
the optimal production uptime t3* increases from 7.454 to 7.462 the optimal selling price s* increases from 30.343 to
30.362 and the expected profit rate P* decreases from 576.849 to 576.461. As the shortage cost per unit time increases
from 0.5 to 0.53, there is a decrease in optimal ordering quantity Q* from 221.454 to 220.833, the optimal production
downtime t1* increases from 1.891 to 1.899, the optimal production uptime t3* increases from 7.454 to 7.503 the optimal
selling price s* decreases from 30.343 to 30.287 and the expected profit rate P* increases from 576.849 to 576.913. As the
demand parameter u increases from 50 to 50.3, there is an increase in optimal ordering quantity Q* from 221.454 to
223.133, the optimal production downtime t1* increases from 1.891 to 1.926, the optimal production uptime
decreases
from 7.454 to 7.436, the optimal selling price s decreases from 30.343 to 30.175 and the expected profit rate P* increases
from 576.849 to 581.138. As the demand parameter v is increases from 0.50 to 0.53, the optimal ordering quantity Q* is
decreasing from 221.454 to 215.616, the optimal production downtime t1*decreases from 1.891 to 1.770, the optimal
production uptime t3* is increasing from 7.454 to 7.514, the optimal selling price s* increases from 30.343 to 30.783 and
expected profit rate P* decreases 576.849 to 562.093. As the inventory holding cost per unit time h increases from 0.50 to
0.65, there is an decrease in the optimal ordering quantity Q* from 221.454 to 221.331, the optimal production downtime
t1*increases from 1.891 to 1.895, the optimal production uptime t3* increases from 7.454 to 7.468, the optimal selling price
s* increases from 30.343 to 30.414 and the expected profit rate P* decreases from 576.849 to 575.895.
Table 1: Optimal Values of T1*, T3*, S*,Q*,P* for Different Values of
Parameters when Shortages Are Allowed (T=12Months)
A
3000
3025
3050
3075
12
105
.5
.5
50
.5
.5
0.2
35
.5
.5
12
12.5
13
106
107
108
.50
.51
.52
.5
1.2
1.9
50.1
50.2
50.3
.55
.60
.65
.51
.52
.53
.21
.22
1*
1.891
1.884
1.877
1.870
1.891
1.893
1.893
1.875
1.859
1.843
1.891
1.852
1.587
1.891
1.892
1.896
1.903
1.915
1.926
1.892
1.894
1.895
1.850
1.810
1.770
1.889
1.888
t *
3
s*
Q*
P*
7.454
7.460
7.466
7.472
7.454
7.396
7.343
7.459
7.464
7.470
7.454
7.419
7.382
7.454
7.457
7.462
7.448
7.442
7.436
7.458
7.463
7.468
7.473
7.493
7.514
7.452
7.451
30.343
30.390
30.436
30.483
30.343
30.616
30.890
30.386
30.430
30.473
30.343
30.436
29.892
30.343
30.353
30.362
30.287
30.231
30.175
30.367
30.390
30.414
30.480
30.626
30.783
30.341
30.339
221.454
221.075
220.696
220.317
221.454
222.650
223.677
222.825
224.193
225.558
221.454
224.986
220.963
221.454
221.427
221.412
222.014
222.574
223.133
221.413
221.372
221.331
219.510
217.565
215.616
221.418
221.382
576.849
576.000
575.151
574.302
576.849
573.454
572.161
576.138
575.427
574.716
576.849
575.121
568.922
576.849
576.640
576.461
578.279
579.709
581.138
576.530
576.212
575.895
571.937
567.019
562.093
576.871
576.894
17
Table 1: Contd.,
.23
34
35
36
.55
.60
.65
.5
1
.5
2
.5
3
1.886
1.839
1.891
1.938
1.889
1.887
1.884
7.450
7.519
7.454
7.388
7.852
7.450
7.449
30.337
29.889
30.343
30.783
30.342
30.342
30.342
221.347
218.216
221.454
224.494
221.403
221.352
221.302
576.915
570.497
576.849
582.900
576.867
576.890
576.921
1.894
7.470
30.342
221.248
576.872
1.897
7.486
30.339
221.042
576.893
1.899
7.503
30.287
220.833
576.913
As the deterioration parameter increases from 0.20 to 0.23, there is a decrease in optimal ordering quantity Q*
from 221.454 to 221.347, the optimal production downtime t1*decreases from 1.891 to 1.886, the optimal production
uptime t3*decreases from 7.454 to 7.450, the optimal selling price s* decreases from 30.343 to 30.337 and expected profit
rate P* increases from 576.849 to 576.915. When increases from 0.50 to 0.65, there is a decrease in optimal ordering
quantity Q* from 221.454 to 221.302, the optimal production downtime t1*decreases from 1.891 to 1.884, the optimal
production uptime t3*decreases from 7.454 to 7.449, the optimal selling price s*decreases from 30.343 to 30.342 and the
expected profit rate P* increases from 576.849 to 576.921.
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optimal production downtime t1*, the expected profit rate P* and the optimal ordering quantity Q* increase. But the optimal
production uptime t3* and the optimal selling price s* decrease. If v increases, the optimal production downtime t1*, the
expected profit rate P* and the optimal ordering quantity Q* decrease. But the optimal production uptime t3* and the
optimal selling price s* increase. When shortage cost per unit decreases, the optimal production downtime t1*, the
expected profit rate P* and the optimal production uptime t3* decrease. But the optimal selling price s* and the optimal
ordering quantity Q* increase. If increases, the optimal production downtime t1*, the expected profit rate P*
Table 2: Sensitivity Analysis of the Model when Shortages Are Allowed
Variation
Parameters
A
Optimal
Policies
t1*
t3*
s*
Q*
P*
t1*
t3*
s*
Q*
P*
t1*
t3*
s*
Q*
P*
t1*
t3*
s*
Q*
P*
t1*
t3*
s*
Q*
P*
t1*
t3*
s*
Q*
P*
t1*
t3*
s*
Q*
P*
t1*
t3*
s*
Q*
P*
t1*
t3*
s*
Q*
-15%
2.016
7.345
29.521
228.232
592.140
1.507
7.710
29.048
207.993
593.368
2.140
7.255
29.142
197.768
586.915
2.235
8.006
29.747
195.498
587.917
1.008
8.519
39.283
162.692
470.331
2.721
6.518
26.236
284.818
589.084
1.870
7.334
30.359
222.937
576.615
1.889
7.447
30.308
221.514
577.329
1.888
7.451
30.343
221.463
-10%
1.974
7.381
29.792
225.979
587.041
1.685
7.521
29.222
212.065
584.096
2.062
7.350
29.496
198.270
578.757
2.108
7.758
29.924
204.490
584.639
1.329
7.807
34.597
191.418
505.250
2.103
7.358
29.171
231.162
585.340
1.877
7.374
30.353
222.453
576.704
1.890
7.449
30.320
221.494
577.168
1.889
7.452
30.343
221.463
Change in Parameters
-5%
0%
5%
1.932
1.891
1.640
7.418
7.454
7.500
30.066
30.343
30.528
223.720
221.454
210.597
581.944
576.849
564.125
1.865
1.891
1.893
7.493
7.454
7.385
29.374
30.343
30.670
215.589
221.454
222.868
579.996
576.849
571.221
1.984
1.891
1.809
7.426
7.454
7.482
30.114
30.343
30.569
214.207
221.454
228.621
580.583
576.849
573.118
1.994
1.891
1.707
7.581
7.454
7.306
30.124
30.343
30.496
212.738
221.454
225.817
580.930
576.849
569.805
1.654
1.891
2.193
7.480
7.454
7.322
30.815
30.343
29.083
194.905
221.454
235.079
534.748
576.849
580.354
1.994
1.891
1.790
7.405
7.454
7.505
30.034
30.343
30.703
226.277
221.454
216.591
582.440
576.849
564.557
1.884
1.891
1.898
7.413
7.454
7.495
30.348
30.343
30.339
221.959
221.454
220.937
576.782
576.849
576.903
1.890
1.891
1.892
7.451
7.454
7.456
30.331
30.343
30.355
221.474
221.454
221.433
577.008
576.849
576.689
1.890
1.891
1.892
7.453
7.454
7.455
30.343
30.343
30.344
221.463
221.454
221.450
10%
1.539
7.501
30.572
208.347
561.710
1.893
7.324
31.000
224.043
565.566
1.736
7.511
30.792
235.723
569.399
1.661
7.297
30.833
239.488
567.689
2.524
6.699
22.507
242.698
582.374
1.693
7.556
31.170
211.705
552.218
1.905
7.536
30.337
220.411
576.946
1.892
7.458
30.367
221.413
576.530
1.893
7.456
30.344
221.448
15%
1.444
7.503
30.844
206.199
559.291
1.891
7.270
31.331
224.996
559.901
1.670
7.540
31.014
242.774
565.691
1.660
7.290
30.911
239.502
566.894
2.572
5.876
21.349
243.200
592.144
1.528
7.580
31.404
204.454
538.628
1.912
7.578
30.335
219.873
576.975
1.893
7.461
30.379
221.393
576.371
1.894
7.456
30.344
221.446
P*
t1*
t3*
s*
Q*
P*
t1*
t3*
s*
Q*
P*
576.860
1.896
7.458
30.349
221.563
576.778
1.894
7.456
30.345
221.529
576.830
Table 2: Contd.,
576.857
576.856
1.894
1.893
7.456
7.455
30.347
30.345
221.526
221.490
576.802
576.826
1.893
1.892
7.455
7.454
30.344
30.344
221.504
221.471
576.835
576.842
(a)
19
576.849
1.891
7.454
30.343
221.454
576.849
1.891
7.454
30.343
221.454
576.849
576.840
1.889
7.452
30.341
221.418
576.871
1.890
7.453
30.343
221.428
576.857
576.835
1.888
7.451
30.339
221.382
576.894
1.889
7.452
30.342
221.403
576.867
576.835
1.886
7.450
30.337
221.347
576.915
1.888
7.451
30.342
221.377
576.877
(b)
(c)
(d)
(e)
Figure 2: Relationship between Parameters and Optimal Values with Shortages
And the optimal production uptime t3* increase. But the optimal selling price s* and the optimal ordering quantity
Q* decrease. As the holding cost per unit h decreases, the optimal production downtime t1*, the optimal production uptime
t3*and the optimal selling price s* decrease.
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20
But the expected profit rate P* and the optimal ordering quantity Q* increase. If h increases, the optimal
production downtime t1*, the optimal production uptime t3*, the optimal selling s* increase. But the expected profit rate P*
and optimal ordering quantity Q* decrease.
As the deterioration parameter decreases, the optimal production downtime t1*, the optimal production uptime
t3*and the optimal selling price s*decrease. But the expected profit rate P* and the optimal ordering quantity Q* increase. If
increases, the optimal production downtime t1*, the optimal production uptime t3*and the optimal selling price s*
increase. But the expected profit rate P* and the optimal ordering quantity Q* decrease. As the deterioration parameter
decreases the optimal production downtime t1*, the optimal production uptime t3*, the optimal selling price s* and the
optimal ordering quantity Q* increase. But the expected profit rate P* decreases. If increases, the optimal production
downtime t1*, the optimal production uptime t3*, the optimal selling price s* and the optimal ordering quantity Q* decrease.
But the expected profit rate P* increases. As decreases, the optimal production downtime t1*, the optimal production
uptime t3*, the optimal ordering Q* and the optimal selling price s*increases. But the expected profit rate P* decreases. If
increases, the optimal production downtime t1*, the optimal production uptime t3*, the optimal ordering quantity Q* and
the optimal selling price s* decrease. But the expected profit rate P* increases.
changes during the period (0, ) due to demand and production, and also the stock level changes during the period ( , )
due to excess production after fulfilling the demand and deterioration. The production stops at time t1, when stock level
reaches maximum. The inventory decreases gradually due to demand and deterioration in the interval (t1,T). At time t=T,
the level of inventory reaches zero and production starts again. The schematic diagram representing the instantaneous state
21
(32)
(33)
(34)
with the boundary conditions I(T) = 0, I(0)=0
The instantaneous state of inventory at any given time t, during the interval (0, T) is
(
( )=
( )=
I(t) =
)#
)#
) ; 0<
&`%
&%/ (u vs)
U
(35)
(
(
)#
dt) ;
)#
* c+
< 4
) );
<
(36)
(37)
(38)
0< T
(39)
This Implies
(
:
8
) [
+[
)#
[% '
) ]]];
)(
)#
?
(40)
<
9
#
8
(
)#
( ) =
&% 2( ) ( ) * )> ; < T
7
Using equations (35) to (37), we obtain the expected stock loss due to deterioration in the interval (0, T) as the
6( ) =
difference between the total quantity produced and the demand met during (0, T) and is given by
L(T) =
)4
(41)
This amount of quantity is lost due to deterioration of commodity and is a waste. To obtain the optimal operating
policies one must reduce the expected stock loss due to deterioration.
Let K (t1, s) is the expected total cost per unit time. The total cost is the sum of the set up cost, cost of units and the
inventory holding cost. Therefore the expected total cost is
(t , s) =
T
U
V
U
U
N
(42)
Substituting the value of I (t) given in equations (35) to (37) and Q in the equation (42) we obtain K (t1, s) as
KGt1, , sH =
+ &% N &
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A
T
(
C
h
% &
* +'
) ())? *
editor@tjprc.org
22
? + %J =
&% (
* )> * )
(43)
Let P (t1, s) be the profit rate function. Since the profit rate function is the total revenue per unit time minus total
cost per unit time. Therefore
P (t1, s) = s (u
) K (t1, s)
(44)
P( , ) = (
W
+ &'%5 t (u vs)t(dt?
U
+ &% N =
?+ %J =
&% &
&% (
* )>)[
) ())> * ?
* +'
(45)
+ &% N =
?+ %J =
)#
&% (
J
G H? + p^& (
&% '
)#
)& +
(
(g
)#
)(
(g
) _d(
)
aN
)#
*f)> * )[
) e[k?
2
*f + '
) ()> * )
(46)
2 ( N ,t)
D=
N t
2 ( N ,t)
N t
<0
2 ( N ,t)
t 2
(47)
( N
( '
M
)#
( N
)# ?
' G
) H
( N
H( (
)#
?&%J(
( N
)%
)#
(
&%
)#
*f)>
)#
*f) *
(48)
( 2
+?%
) &
M
+? %
& %
J
(g
(
)
`%
(g
*f) * )
23
*fc * + `%
( )* c
(49)
Solving equations (48) and (49) simultaneously, we obtain the optimal time at which the production is to be
stopped i.e., t1* of t1 and s* of s.
The optimal ordering quantity Q* of Q in the cycle of length T is obtained by substituting the optimal value of t1
in (38) as, @ =
(50)
9 NUMERICAL ILLUSTRATION
In this section, we discuss a numerical illustration of the model. For demonstrating the solution procedure of the
model, the production parameter is considered to vary from 105 to 108, the values of other parameters and costs
associated with the model are:
A=3000,3100,3300; C=12,13,14,15; =0.5,0.52,0.54,0.56;
=0.5,1.5,2.5; s=35,36,37,38
3000
3100
3200
3300
12
105
.5
u
.5
13
14
15
106
107
108
.52
.54
.56
.5
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50
.5
t 1*
s*
Q*
p*
.5
.2
35
.5
1.148
1.126
1.102
1.079
1.114
1.066
1.016
1.134
1.121
1.107
1.259
1.335
1.425
1.148
32.649
32.908
33.173
33.444
33.244
33.837
34.458
32.702
32.755
32.807
33.261
33.828
34.465
32.649
112.503
111.398
110.242
109.056
110.830
108.424
105.837
112.897
113.279
113.650
118.342
122.700
128.037
112.503
507.958
505.163
502.429
499.772
500.042
492.622
485.914
507.054
506.155
505.261
504.586
500.118
495.048
507.958
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24
1.499
2.498
1.148
1.183
1.355
1.109
1.072
1.039
31.900
17.710
32.649
32.226
32.169
32.978
33.322
33.681
128.543
165.946
112.503
114.215
122.212
110.568
108.733
107.034
481.150
85.665
507.958
513.549
522.283
505.275
502.666
500.450
1.120
32.926
111.106
504.122
1.090
33.234
109.600
500.405
1.059
33.571
108.040
496.805
1.144
1.139
1.135
1.192
1.384
1.485
1.132
1.114
1.093
32.678
32.707
32.737
33.007
33.775
34.314
32.760
32.896
33.064
112.289
112.075
111.861
114.614
123.547
127.967
111.724
110.821
109.777
507.790
507.620
507.448
513.298
521.564
528.165
507.225
506.351
505.308
Production downtime t1* increases from 1.148 to 1.425, the optimal selling price s* increases from 32.649 to
34.465 and the expected profit rate P*decreases from 507.958 to 495.048. As the demand parameter u increases from 50
to 51, the optimal ordering quantity Q* increases
From 112.503 to 122.212, the optimal production downtime t1* increases from 1.148 to 1.355, the optimal selling
price s* decreases from 32.649 to 32.169 and expected profit rate P* increases from 507.958 to.522.283. As v increases
from.50 to.53, the optimal ordering quantity Q*decreases from 112.503 to 108.040, the optimal production downtime t1*
decreases from 1.148 to 1.059, the optimal selling price s* is increasing from 32.649 to 33.571 and expected profit rate
P*decreases from 507.958 to 496.805. As the inventory holding cost per unit time h increases from 0.5 to 0.65, the
optimal ordering quantity Q*decreases from 112.503 to 107.034, the optimal production downtime t1*decreases from 1.148
to1.039, the optimal selling price s* increases from 32.649 to 33.681 and the expected profit rate P* decreases from 507.958
to 500.450. As the deteriorating parameter increases from 0.5 to 2.5, the optimal ordering quantity Q* increases from
112.503 to 165.946, the optimal production downtime t1* increases from 1.148 to 2.498, the optimal selling price s*
decreases from 32.649 to 17.710 and the expected profit rate P*decreases from 507.958 to 85.665. As the deterioration
parameter increases from.20 to.23, the expected profit rate P* decreases from 507.958 to 507.448 the optimal
production downtime t1* decreases from 1.148 to 1.135, the optimal selling price s* increases from 32.649 to 32.737 and
optimal ordering quantity Q*, decreases from 112.503 to 111.861. As increases from 0.5 to 0.65, the optimal ordering
quantity Q*decreases from 112.503 to 109.777, the optimal production downtime t1* decreases from 1.148 to 1.093, the
optimal selling price s* increases from 32.649 to 33.064 and the expected profit rate P* decreases from 507.958 to 505.308.
25
It is observed that cost are having significant influence on the optimal ordering quantity and production schedules.
As the ordering cost A decreases the optimal production downtime t1*, the optimal ordering quantity Q* and the expected
profit rate P* increase. But the optimal selling price s* decreases. If A increases, the optimal production downtime t1*, the
optimal ordering quantity Q* and the expected profit rate P* decrease. But the optimal selling price s* increases. If C
decreases, the optimal production downtime t1*, the optimal ordering quantity Q* and the expected profit rate P* increase.
But the optimal selling price s* decreases. If the cost per unit C is increases, the optimal production downtime t1*, ordering
quantity Q*and the expected profit rate P* decrease. But the optimal selling price s* increases. As the demand parameter u
decreases, the optimal production downtime t1*, the optimal ordering quantity Q* and the expected profit rate P* decrease.
But optimal selling price s* increases. If u increases, the optimal production downtime t1*, the optimal ordering quantity
Q*, and the expected profit rate P* increase and the optimal selling price s* decreases. As the demand parameter v
decreases, the optimal production downtime t1*, the optimal ordering quantity Q* and the expected profit rate P* increase.
But the optimal selling price s*decreases. If the demand parameter v increases, the optimal production downtime t1*, the
optimal ordering quantity Q* and the expected profit rate P* decrease. But the optimal selling price s* increases. As the
holding cost per unit h decreases, the optimal production downtime t1*, the optimal ordering quantity Q* and expected
profit rate P* increase. But the optimal selling price s* decreases. If the holding cost per unit h increases, the optimal
production downtime t1*, the optimal ordering quantity Q* and expected profit rate P* decrease. But the optimal selling
price s*, increases. As the production parameter decreases, the optimal production downtime t1*and the expected profit
rate P* increase. But optimal selling price s*and the optimal ordering quantity Q* decrease. If the production parameter
increases, the optimal production downtime t1* and the expected profit rate P*decrease. But the optimal ordering quantity
Q* and optimal selling price s* increase. If decreases, the optimal production downtime t1*, the optimal selling price
s*and the optimal ordering quantity Q*decrease. But the expected profit rate P* increases. If increases, the optimal
production downtime t1*, the optimal selling price s*, and the optimal ordering quantity Q* increase. But the expected
downtime t1*, the optimal selling price s* decrease. But the optimal ordering quantity Q* and the expected profit rate P*
increases.
Table 4: Sensitivity Analysis of the Model when Shortages are Allowed
Variation
Parameters
A
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Optimal
Policies
t1*
s*
Q*
P*
t1*
s*
Q*
P*
t1*
s*
Q*
P*
t1*
s*
Q*
P*
t1*
s*
-15%
1.408
31.955
124.609
524.266
1.371
32.045
122.924
527.806
0.927
42.868
101.087
356.899
1.995
30.331
129.729
534.467
1.197
31.633
-10%
1.326
32.182
120.913
518.896
1.157
32.280
112.958
512.765
0.957
40.734
102.693
445.246
1.509
32.088
128.968
528.759
1.189
32.332
Change in Parameters
-5%
0%
5%
1.179
1.148
1.104
32.265
32.649
33.040
114.024
112.503
110.825
512.222
507.958
503.788
1.152
1.148
1.130
32.527
32.649
33.008
112.704
112.503
111.619
509.563
507.958
503.170
1.050
1.148
1.990
35.733
32.649
30.228
107.572
112.503
114.474
482.365
507.958
532.460
1.326
1.148
1.074
32.314
32.649
33.396
120.907
112.503
108.823
520.294
507.958
498.604
1.168
1.148
1.128
32.489
32.649
32.812
10%
1.079
33.444
109.056
499.772
1.105
33.362
110.389
498.507
1.990
28.410
114.761
551.213
1.049
34.411
107.560
490.269
1.109
32.978
15%
1.044
33.868
107.270
495.955
1.076
33.717
108.936
494.051
1.995
26.759
114.722
563.102
1.000
36.176
104.982
481.059
1.09
33.148
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26
Q*
P*
t1*
s*
Q*
P*
t1*
s*
Q*
P*
t1*
s*
Q*
P*
t1*
s*
Q*
P*
t1*
s*
Q*
P*
t1*
s*
Q*
P*
Table 4: Contd.,
114.498
113.495
112.503
510.693
509.320
507.958
1.373
1.220
1.148
32.359
32.438
32.649
109.391
110.183
112.503
521.093
512.748
507.958
1.112
1.138
1.148
31.839
32.236
32.649
110.125
111.655
112.503
518.363
513.389
507.958
1.148
1.148
1.148
32.644
32.646
32,649
112.526
112.514
112.503
507.991
507.969
507.958
1.157
1.152
1.148
32.593
32.620
32.649
112.927
112.715
112.503
508.288
508.124
507.958
1.162
1.155
1.148
32.557
32.601
32.649
113.174
112.851
112.503
508.575
508.279
507.958
1.019
1.060
1.148
31.386
32.000
32.649
105.999
108.091
112.503
489.035
498.325
507.958
118.650
549.923
1.465
31.860
104.585
524.158
1.069
31.453
108.009
522.782
1.147
32.642
112.538
507.991
1.161
32.566
113.138
508.450
1.168
32.517
113.475
508.846
0.973
30.885
103.556
477.300
(a)
(b)
(c)
(d)
111.525
506.608
1.078
32.925
114.451
503.271
1.277
33.396
119.363
503.517
1.148
32.651
112.491
507.946
1.144
32.678
112.289
507.790
1.140
32.702
112.127
507.607
1.359
33.639
122.385
519.891
110.568
505.275
1.012
33.198
116.188
498.759
1.379
34.137
125.275
497.669
1.148
32.653
112.479
507.935
1.139
32.707
112.075
507.620
1.132
32.760
111.724
507.225
1.528
34.565
129.811
531.255
109.636
503.960
0.952
33.474
117.832
494.439
1.497
36.888
129.615
496.851
1.149
32.655
112.46
507.923
1.135
32.737
111.861
507.448
1.123
32.824
111.289
506.807
1.556
5.052
130.988
538.560
27
selling price s* decreases. If the deterioration parameter increases, the optimal production downtime t1*, optimal
ordering quantity Q* and expected profit rate P*decrease. But the optimal selling price s* increases. As decreases, the
optimal production downtime
1,
the optimal ordering quantity Q* and expected profit rate P* increase. But the optimal
1,
expected profit rate P* decrease. But the optimal selling price s* increases. Ifs decreases, the optimal production
downtime
1,
the optimal ordering quantity Q*, the expected profit rate P* and the optimal selling price s* decreases. Ifs
1,
the optimal ordering quantity Q*, the expected profit rate P* and the
CONCLUSIONS
This paper deals with the stochastic production economic quantity model for deteriorating items using Weibull
distribution. Here it is assumed that the production quantity is random and follows a Weibull distribution. The Weibull
distribution is capable of getting several types of production rates such as increasing/decreasing/constant. It is also
assumed that the life time of commodity is random and follows a three parameters Weibull distribution. This model is a
generic stochastic production quantity model since it includes different types of production quantity models as particular
cases. The optimal production and pricing policies are derived with suitable cost consideration. The sensitivity analysis of
the model reveals that the production rates of distribution parameters have significant influence on optimal values of
production uptime and downtime. It is also observed that the deteriorating distribution parameters influence the optimal
selling price. The production manger of the system can estimate the parameters of the production and deteriorating
distribution with historical data. In this paper we assumed that the money value is constant throughout the cycle length. It
is possible to develop stochastic production economic quantity models with changing money value, which will be take up
elsewhere.
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