Determining the fabrication runtime for a buyer-vendor system with stochastic breakdown, accelerated rate, repairable items, and multi-delivery strategy

This study explores the optimal fabrication runtime for a buyer-vendor incorporated system featuring repairable items, stochastic breakdown, accelerated rate, and multi-delivery strategy. Operating in today’s competitive global market, transnational production firms make every effort to meet client requirements in terms of the due date and quality goods. Further, they also must handle all inevitable events incurred in the manufacturing process, such as unanticipated equipment breakdowns and defective products, with caution to avoid production schedule delay and cost overrun. To examine such a vendor-buyer incorporated system, we build a model to characterize the aforementioned features in the system. The function of total system cost is derived through formulation and analyses. The optimization method and a recursive algorithm are employed to help in deriving the optimal (i.e., cost minimization) fabrication runtime for our problem. An example numerically illustrates how our model, method, and algorithm work. It also reveals the capability of our model in analyzing the impact of each and/or joint feature(s) (e.g., the breakdown, accelerated rate, rework, multi-delivery strategy) on the system’s utilization, optimal runtime, total expenses, and individual cost contributor to assist in managerial decision making, and hence, enabling the firm to gain competitive advantage.