Producer–retailer integrated EMQ system with machine breakdown, rework failures, and a discontinuous inventory issuing policy

This study develops two extended economic manufacturing quantity (EMQ)-based models with a discontinuous product issuing policy, random machine breakdown, and rework failures. Various real conditions in production processes, end-product delivery, and intra-supply chains such as a producer–retailer integrated scheme are examined. The first model incorporates a discontinuous multi-delivery policy into a prior work (Chiu et al. in Proc Inst Mech Eng B J Eng 223:183–194, 2009) in lieu of their continuous policy. Such an enhanced model can address situations in supply chain environments, where finished products are transported to outside retail stores (or customers). The second model further combines retailer’s stock holding costs into the first model. This extended EMQ model is applicable in situations in present-day manufacturing firms where finished products are distributed to company’s own retail stores (or regional sales offices) and stocked there for sale. Two aforementioned extended EMQ models are investigated, respectively. Mathematical modeling along with iterative algorithms are employed to derive the optimal production run times that minimize the expected total system costs, including the costs incurred in production units, transportation, and retail stores, for these integrated EMQ systems. Numerical examples are provided to demonstrate the practical application of the research results.