Determination of economic order quantities (EOQ) in an integrated material flow system

The material flow system is the backbone of a manufacturing system as it provides both physical and operational structure. Each component (material handling, until load size, storage space, layout, etc) is a difficult problem to address on its own; however, it is imperative that components be addressed concurrently due to their interactions. This paper explores the relationships between the components in the material flow system with respect to determining the economic order quantity. This is in contrast to the traditional EOQ model, which considers only order cost, inventory cost, and demand, ignoring other material flow system issues. A multi-item economic order quantity (EOQ) model under a storage space limit is considered with respect to material handling equipment selection and requirements, unit load size, and flow path selection. The integrated material flow system problem is mathematically formulated as a large scale, nonlinear integer programming model and a heuristic solution procedure is developed. The impact of using an integrated approach to determine the EOQ is illustrated and solutions are compared to a lower bound. It is found that an integrated approach provides consistent and significant improvement in the overall solution quality.     

Joint production and shipment lot sizing for a delivery price-based production facility

A joint economic production quantity (EPQ) and delivery quantity model for a production system is investigated in this paper. More specifically, an EPQ policy is implemented in the production system, while a smaller shipping quantity is periodically dispatched to the customer. The production system is also responsible for the shipment cost, i.e. a delivery price-based procurement from the customer. The considered cost includes setup cost to launch the batch production, inventory carrying cost, and transportation cost, where the transportation cost is a function of the delivery quantity. A per unit time cost model is developed and analysed to determine the optimal production and delivery quantities. Under some mild conditions, it can be shown that the joint cost function is convex with respect to the production quantity; and the number of delivery is an integer in each replenishment cycle. Computational study has demonstrated the significant impact of the joint decision model on the operating cost. In particular, the reduction in total cost can be more than 15% when inventory carrying costs, and/or transportation costs, are high.     

Work-in-process space allocation: a model and an industrial application

This paper presents a model for allocating storage space to inventory in a way that minimizes the cost of material handling. The space allocation problem is modeled as a generalized transportation problem; however, transporting material within the facility is the focus. The basic formulation of the model considers material type, material flow transitions, and distance transported. The model is extended to determine production levels for multiple products such that additional material handling costs (i.e., load/ unload times) are minimized. Applications of the just-in-time (JIT) concept and material handling in the job shop environment are discussed. Finally, an industrial case study is presented     

Marginal analysis guided design justification: a material handling example

The design and justification of an integrated manufacturing system and all of the supporting sub-systems (e.g. material handling system) is a difficult task. One of the most difficult aspects in the design process is determining how and where to proceed. This paper proposes the use of a marginal analysis-directed branch and bound approach as the basis for directing the design process so that a combined economic and performance justification path results. The background and rationale for a marginal analysis guided design approach is given and an example of a material handling system design is presented to illustrate the development of a design justification decision path.     

Book review of Global Strategic Management,by P. Lasserre,Palgrave Macmillan,Basingstoke, 2003, xx + 454 pp., £24.99, softcover (ISBN 0 333 79375 7)

This paper considers the simultaneous scheduling of material handling transporters (such as automatic guided vehicles or AGVs) and manufacturing equipment (such as machines and workcentres) in the production of complex asembled product. Given the shipping schedule for the end-items, the objective of the integrated problem is to minimize the cumulative lead time of the overall production schedule (i.e. total makespan) for on-time shipment, and to reduce material handling and inventory holding costs on the shop-floor. The problem of makespan minimization is formulated as a transportation integrated scheduling problem, which is NP-hard. For industrial size problems, an effective heuritsic is developed to simultaneouly schedule manufacturing and material handling operations by exploting the critical path of an integrated operation network. The performance of the proposed heuristic is evaluated via extensive numerical studies and compared with the traditional sequential scheduling approach. The superiority of the integrated heuristic is well documented.     

An integrated EPQ model based on a control chart for an imperfect production process

The notion of quality control is introduced into the classic economic production quantity (EPQ) model. Based on previous research, this paper contributes to an integrated EPQ model combining the concepts of statistical process control and maintenance. An imperfect production process involving three different conditions is considered. A control chart is adopted to monitor the whole process with Taguchi's loss function estimating the quality cost of each condition. A corresponding maintenance policy is planned for the machine depending on what condition it runs in. Thus the proposed EPQ model takes quality-related costs and maintenance-related costs into account other than storage costs and ordering costs already considered in the classic model. The objective of this model is to minimise the total expected production cost per production cycle while simultaneously determining the optimal parameters of control chart design, the interval between sampling, the sample size and the maintenance decision policy. The pattern search method is used to solve the problem using the MATLAB toolbox. In addition, a case study, sensitivity analysis and comparison analysis are presented to demonstrate the application of the model.     

Optimal economic production quantity policy for a parallel system with repair,rework, free-repair warranty and maintenance

Hot standby redundancy maintains the working order of a system, repairs offer restoration in case of failure, and preventive maintenance (PM) prevents trouble. Warranties provide assurance to customers, and a superior warranty signifies higher product quality. The running costs of redundancy, maintenance and warranties influence decisions during product manufacture. Therefore, this paper presents an economic production quantity (EPQ) model for a parallel system with maintenance, production, and free-repair warranty (FRW) programmes. The production system begins with a basic unit and produces conforming items. PM is performed after the production run period and is classified as imperfect or perfect. If the basic unit fails, it is repaired and returned to operation after perfect PM; the spare unit is online only during the repair time of the basic unit. The spare will produce some number of defective goods, which are reworked in the same inventory cycle. The hot spare is minimally repaired if it fails in its standby or online mode. In this study, an inferior item is defined as one that satisfies specifications on inspection and is usable but is likely to incur postsale servicing costs when sold under an FRW. The total cost of this EPQ model includes setup, holding, PM, restoration, minimal repair, and warranty costs. The optimal production runtime is determined by minimising the total cost. Several cases are discussed in this paper, and the proposed model is illustrated using a numerical example and sensitivity.     

EXCITE: Expert consultant for in-plant transportation equipment

The cost of handling material is a vital factor in the facilities design process, whether it is for a new facility or for the redesign of an existing facility. Handling activities generally account for 30 to 40% of production costs, but in some industries they can be as high as 70%. Well designed handling systems are thus crucial for reduced costs and increased profits.

A key task in the material handling system design process is the selection and configuration of equipment for transport and storage in a facility. Material handling equipment selection is a complex, tedious task, and there is usually more than one good answer for any particular situation. A number of good quantitative techniques are available to aid the industrial engineer in determining layout design with the aim of reducing material handling cost. Unfortunately, there are few tools other than checklists to aid the engineer in the selection of appropriate, cost-effective material handling equipment. Analytical models are not often applied in industry because they generally consider only quantifiable factors such as cost and utilization and are difficult to implement.

This paper describes a knowledge-based approach for addressing the major factors that influence equipment selection. The research effort involved two major activities: compilation of a knowledge base from an in-depth review and modification of traditional checklists and published literature on equipment selection; and development of a prototype expert system for material handling equipment selection.     

Determining the optimal lot size for the finite production model with random defective rate,the rework process,and backlogging

This paper considers the effects of the reworking of defective items on the economic production quantity (EPQ) model with backlogging allowed. The classic EPQ model assumes that manufacturing facility functions perfectly during a production run. However, due to process deterioration or other factors, the production process may shift and produce imperfect quality items. In this study, a random defective rate is considered, and when regular production ends, the reworking of defective items starts immediately. Not all of the defective items are reworked, a portion of them are scrap and are discarded. Repairing and holding cost per reworked item and disposal cost per scrap item are included in the proposed mathematical modelling and analysis. The renewal reward theorem is utilized to deal with the variable cycle length, and the optimal lot size that minimizes the overall costs for the imperfect quality EPQ model is derived where backorders are permitted.     

Dynamic cellular manufacturing system design considering alternative routing and part operation tradeoff using simulated annealing based genetic algorithm

In this paper, an integrated mathematical model of multi-period cell formation and part operation tradeoff in a dynamic cellular manufacturing system is proposed in consideration with multiple part process route. This paper puts emphasize on the production flexibility (production/subcontracting part operation) to satisfy the product demand requirement in different period segments of planning horizon considering production capacity shortage and/or sudden machine breakdown. The proposed model simultaneously generates machine cells and part families and selects the optimum process route instead of the user specifying predetermined routes. Conventional optimization method for the optimal cell formation problem requires substantial amount of time and memory space. Hence a simulated annealing based genetic algorithm is proposed to explore the solution regions efficiently and to expedite the solution search space. To evaluate the computability of the proposed algorithm, different problem scenarios are adopted from literature. The results approve the effectiveness of the proposed approach in designing the manufacturing cell and minimization of the overall cost, considering various manufacturing aspects such as production volume, multiple process route, production capacity, machine duplication, system reconfiguration, material handling and subcontracting part operation.     

Use of activity-based costing and economic value analysis for the justification of capital investments in automated material handling systems

This paper develops a two-stage method for the justification of investment in modern material handling systems. The underlying approach places heavy emphasis on the use of cost avoidance data quantified by activity-based costing systems. The first stage collects the life-cycle costs and benefits resulting from the reconfiguration of material handling systems in manufacturing facilities. A recently developed software package for process modelling and management is employed to capture the characteristics of material handling activities and to derive accurate applied cost rates for each activity and material handling system combination. These activity-related cost data as well as various opportunity costs are incorporated in a case-specific, investment decision model that constitutes the second stage of the method. The model performs an Economic Value Analysis for each material handling alternative. In doing so, it offers a sound basis for economic comparison of different systems. A case study illustrates the merit of our two-stage method in decision making by placing an accurate and reliable economic value on the transition from manual to automated material handling in a manufacturing facility. The use of activity-based costs reverses the decision of sustaining the 'status quo' supported by a traditional investment justification approach restricted to solely labour cost reductions     

ADVISOR: A computer-aided material handling equipment selection system

This paper develops and describes a systematic computer-assisted methodology for the selection of material handling equipment (MHE). A microcomputer based system called ADVISOR models the material handling equipment selection process and employs information on 77 of the most common equipment types used in material transport, positioning, unit formation, and storage. The system identifies the appropriate equipment type for an application in two stages. At the primary stage, potential equipment types are identified through the use of physical requirements of the material handling activities specified by users. Eligible equipment are ranked according to their normalized accumulated rating and placed in a candidate equipment list. After this, a second stage involving an economic analysis for each eligible equipment is performed. The evaluation criteria provided by ADVISOR include present worth (PW).equivalent uniform annual cost (EUAC), return on investment (ROI), and payback period(PP) methods. Through ADVISOR, the expert-like MHE selection system recommends a ranked set of equipment based on user input data. An example problem is given in the paper to demonstrate the use of the system.     

Integrating the economic production model with deteriorating raw material over multi-production cycles

This paper considers an Economic Production Quantity (EPQ) model with deteriorating raw material and investigates the impact of deterioration on the production process. The EPQ base case with no deterioration is presented where raw material is ordered for multiple production cycles. We present the differential equations to calculate the on-hand inventory of raw material and present closed-forms expressions for the required order of raw material to result in a desired amount of effective raw material per order cycle. Closed-form expression for the total profit per unit time is obtained and we solve for the optimal production quantity of finished product per production cycle and the order quantity of raw material. We present numerical examples where we compare our model to a system which ignores the impact of deterioration and results in shorter production cycles due to an insufficient amount of effective raw material.     

An integrated approach to determine the block layout,AGV flow path and the location of pick-up/delivery points in single-loop systems

Layout design and material handling system design are two of the major aspects of facility planning. Although both aspects directly influence each other, the classical approach to the layout design is carried out in two separate steps: in the first step the block layout, i.e. the location of the departments in the workshop, is constructed, and in the second step, the material handling system is designed. The separate optimisation of these two aspects of the problem leads to solutions that can be far from the global optimum. In this paper, we develop an integrated algorithm to design the facilities and material handling systems. We focus on single-loop AGV systems. The proposed algorithm determines the block layout, AGV single-loop flow path and pick-up delivery stations, simultaneously. The associated from–to chart and the area of departments are the principal inputs of the algorithm. The objective is minimising total material flow distance among all departments. The results of our computational experiments show the algorithm was coded using MATLAB 7.0, and that our integrated algorithm is more efficient in terms of both the objective function value and the runtime.     

A production quantity model for imperfect quality items with shortage and screening constraint

This study develops an economic production quantity (EPQ) model and solution procedure for imperfect items with shortage and screening constraint. The Renewal Reward Theorem (RRT) is applied to formulate the exact expected total profit per unit time. We have shown the robustness of our model using time interval as decision variable rather than the traditional order size and backorder quantity. A solution procedure is provided to derive the optimal policy. Special cases of the EOQ/EPQ models can be obtained by taking the parameter limiting values. Numerical examples and sensitivity analysis are presented to verify our results.     

A neural algorithm for finding the shortest flow path for an automated guided vehicle system

The automated guided vehicle (AGV)system is emerging as the dominant technology to maximize the flexibility of material handling, while increasing the overall productivity of manufacturing operations. This paper presents a new way of finding the shortest flow path for an AGV system on a specific routing structure. An optimal solution of the system is determined by using an approach based on the Hopfield neural network with the simulated annealing (SA) procedure. In other words, the proposed approach reduces the total cost of an AGV delivery path from one workstation to another on the shop floor. By changing the temperature of the two-stage SA, a solution can be found that avoids potential collisions between AGVs. Both the flow path and the potential collision, which are major problems in AGV systems, may be solved simultaneously by the proposed neural network approach. Other advantages offered by the proposed method are its simplicity compared with operations research (OR)methods and a decreased number of needed AGVs. The performance of the approach is also investigated.     

Economic production order quantity and quality

The purpose of this study is to integrate a conventional production-inventory management approach and a process-quality design approach so as to promote quality and reduce costs. Because the integration of these two approaches into a single system is conducted under the influence of a deterioration process, estimated costs of production must be modified. Only then can these various costs be presented as a total cost for the present integrated system. This total cost includes: a setup cost for production reordering and process resetting, quality-related costs stemming from the loss of product quality along with a tolerance-related production process cost and a failure cost for product defects, backorder costs for production shortage, carrying costs generated by the storing and handling of inventory, and material costs for determining the process mean. The Taguchi quality loss function is introduced to assess quality loss in the system. The decision variables include the initial setting (process mean), process tolerance, and production order quantity. These variables need to be determined simultaneously to minimise the average total cost for a cycle time. An example is presented to demonstrate the proposed approach.     

Determination of unit load sizes in an AGV-based material handling system for an FMS

Unit load size is a key factor in an automated guided vehicle based material handling system for a flexible manufacturing system. Highlighting this aspect and its importance at the design stage, this paper presents an integer programming formulation of the problem of finding the optimal unit load size. Using an existing analytical model to decide the number of AGVs required, an algorithm based on branching and implicit enumeration and a heuristic have been developed. Revised computations due to dynamic system conditions such as changes in part mix are also possible with the proposed algorithms. The methodologies have been demonstrated using numerical examples.     

An integrated computer-aided system for generation and evaluation of sustainable process alternatives

This paper presents an integrated system for generation of sustainable process alternatives with respect to new process design as well as retrofit design. The generated process alternatives are evaluated through sustainability metrics, environmental impact factors as well as inherent safety factors. The process alternatives for new process design as well as retrofit design are generated through a systematic method that is simple yet effective and is based on a recently developed path flow analysis approach. According to this approach, a set of indicators are calculated in order to pinpoint unnecessary energy and material waste costs and to identify potential design (retrofit) targets that may improve the process design (in terms of operation and cost) simultaneously with the sustainability metrics, environmental impact factors and the inherent safety factors. Only steady state design data and a database with properties of compounds, including, environmental impact factor related data and safety factor related data are needed. The integrated computer-aided system generates the necessary data if actual plant or experimental data are not available. The application of the integrated system is highlighted through a number of examples including the well-known HDA process.     

经济生产批量与CUSUM控制图最优化联合设计

针对传统经济生产批量一般以完美生产过程为对象,质量成本通常也仅以符合规格为判断的标准等问题,提出了一种考虑田口损失函数的将经济生产批量与累积和控制图联合设计的模型。对于生产过程,提出了一种更符合实际情况的三阶段的制造过程,建立了考虑均值随机偏移的三阶段损失模型,并以此为基础,建立了综合考虑包括质量损失及与批量相关的储存成本、订货成本等在内的总期望成本,目的是获得最优化的经济生产批量和累积以及控制图参数设计联合模型,并使生产过程的总期望成本最小。采用行径搜索法对模型进行求解,并举出数值例子进行比较和参数敏感度分析加以说明模型的应用情况。