On setting the delivery due date with production on a machine under outsourced maintenance

We consider an unreliable production system with a contractual relationship with a customer for a firm delivery date. We focus on the production-related decisions of the manufacturer. We assume that production rate is constant as long as the system is up and running but the randomness in production...

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Main Authors: MOOSA, Sharafali, TARAKCI, Hakan., KULKARNI, Shailesh, Shahul Hameed, Raja Abdul Razack
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Language:English
Published: Institutional Knowledge at Singapore Management University 2017
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Online Access:https://ink.library.smu.edu.sg/lkcsb_research_all/11
https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1016&context=lkcsb_research_all
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spelling sg-smu-ink.lkcsb_research_all-10162017-06-08T06:29:00Z On setting the delivery due date with production on a machine under outsourced maintenance MOOSA, Sharafali TARAKCI, Hakan. KULKARNI, Shailesh Shahul Hameed, Raja Abdul Razack We consider an unreliable production system with a contractual relationship with a customer for a firm delivery date. We focus on the production-related decisions of the manufacturer. We assume that production rate is constant as long as the system is up and running but the randomness in production is due to downtimes as a result of breakdowns and scheduled preventive maintenance activities. The maintenance of the production facility is outsourced to a contractor. As production output is random, the manufacturer needs to make two important decisions, viz (i) how much time to allow for production taking into account the trade-off between the penalty fee if actual production time turns out to be longer than the deadline and the inventory holding cost if the production time is shorter than the allowed time and (ii) how to design the maintenance outsourcing contract to maximize its own profit while satisfying the contractor's reservation (minimum) profit requirements. This is a finite horizon optimization problem. A regenerative stochastic process is identified and analysed to develop the cost function over the finite horizon. The optimization problem will be illustrated through numerical examples. Some managerial insights with regard to coordination and some extensions will also be provided. 2017-04-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/lkcsb_research_all/11 https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1016&context=lkcsb_research_all http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection Lee Kong Chian School of Business eng Institutional Knowledge at Singapore Management University Maintenance Reliability Availability Outsourcing Channel coordination Operations and Supply Chain Management
institution Singapore Management University
building SMU Libraries
country Singapore
collection InK@SMU
language English
topic Maintenance
Reliability
Availability
Outsourcing
Channel coordination
Operations and Supply Chain Management
spellingShingle Maintenance
Reliability
Availability
Outsourcing
Channel coordination
Operations and Supply Chain Management
MOOSA, Sharafali
TARAKCI, Hakan.
KULKARNI, Shailesh
Shahul Hameed, Raja Abdul Razack
On setting the delivery due date with production on a machine under outsourced maintenance
description We consider an unreliable production system with a contractual relationship with a customer for a firm delivery date. We focus on the production-related decisions of the manufacturer. We assume that production rate is constant as long as the system is up and running but the randomness in production is due to downtimes as a result of breakdowns and scheduled preventive maintenance activities. The maintenance of the production facility is outsourced to a contractor. As production output is random, the manufacturer needs to make two important decisions, viz (i) how much time to allow for production taking into account the trade-off between the penalty fee if actual production time turns out to be longer than the deadline and the inventory holding cost if the production time is shorter than the allowed time and (ii) how to design the maintenance outsourcing contract to maximize its own profit while satisfying the contractor's reservation (minimum) profit requirements. This is a finite horizon optimization problem. A regenerative stochastic process is identified and analysed to develop the cost function over the finite horizon. The optimization problem will be illustrated through numerical examples. Some managerial insights with regard to coordination and some extensions will also be provided.
format text
author MOOSA, Sharafali
TARAKCI, Hakan.
KULKARNI, Shailesh
Shahul Hameed, Raja Abdul Razack
author_facet MOOSA, Sharafali
TARAKCI, Hakan.
KULKARNI, Shailesh
Shahul Hameed, Raja Abdul Razack
author_sort MOOSA, Sharafali
title On setting the delivery due date with production on a machine under outsourced maintenance
title_short On setting the delivery due date with production on a machine under outsourced maintenance
title_full On setting the delivery due date with production on a machine under outsourced maintenance
title_fullStr On setting the delivery due date with production on a machine under outsourced maintenance
title_full_unstemmed On setting the delivery due date with production on a machine under outsourced maintenance
title_sort on setting the delivery due date with production on a machine under outsourced maintenance
publisher Institutional Knowledge at Singapore Management University
publishDate 2017
url https://ink.library.smu.edu.sg/lkcsb_research_all/11
https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1016&context=lkcsb_research_all
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