Optimal inventory models for imperfect and deteriorating items with carbon emissions considerations / Lok Yi Wen
In the pursuit of unprecedented profitability, companies recognise the irrefutable linchpin of effective inventory management. As a symphony of financial capability and operational excellence, this discipline holds the key to bolstering optimal profits while streamlining costs. The Economic Order...
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| Format: | Thesis |
| Published: |
2024
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| Online Access: | http://studentsrepo.um.edu.my/15744/1/Lok_Yi_Wen.pdf http://studentsrepo.um.edu.my/15744/2/Lok_Yi_Wen.pdf http://studentsrepo.um.edu.my/15744/ |
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| Summary: | In the pursuit of unprecedented profitability, companies recognise the irrefutable linchpin
of effective inventory management. As a symphony of financial capability and operational
excellence, this discipline holds the key to bolstering optimal profits while streamlining
costs. The Economic Order Quantity (EOQ) model often emerges as an illustrious
contributor to the realm of inventory modelling, that is, determining optimal inventory
levels and offering invaluable guidance to decision-makers. However, the complexity
of inventory management is compounded by the presence of imperfect items, such as
defective goods produced during the manufacturing process or damage incurred during
transportation or handling. This study addresses this challenge by developing two EOQ
models, each grounded in a distinct policy: the first involves rectifying imperfect items
through repair, while the second revolves around replacing the imperfect items by procuring
new ones from an alternate supplier. The developed models judiciously account for a
fixed proportion of imperfect items within order quantity determination. With keen
insight, companies are equipped to select the most astute policy that suits their unique
circumstances. In addition, the investigation delves into the complexities of managing
non-instantaneous deteriorating items, which necessitate timely sales to avert their eventual
deterioration. An overabundance in ordering quantity can lead to financial losses should
unsold items deteriorate, while an under-stocking runs the risk of unfulfilled market
demand. In light of this, this study explores the concept of preservation technology,
which prolongs the shelf life of non-instantaneous deteriorating products. Diverging
from conventional EOQ models that assume a fixed time interval before deterioration disregards environmental considerations, the proposed model captures the variability of
pre-deterioration periods contingent upon preservation levels, which is more realistic to
real-world dynamics. Of particular significance is the dependence of deterioration rate
on preservation level, and this pivotal relationship enhances the accuracy of the proposed
EOQ model in ascertaining optimal order quantities, thereby effectively curbing waste and
safeguarding against stockouts. The inclusion of carbon emissions in the developed model
reflects our growing concerns about environmental issues and governmental policies that
aim to mitigate carbon emissions. Moreover, this study encompasses numerical analyses to
support the practical applicability of the models as well as sensitivity analyses to examine
the effects of diverse parameter combinations within the models, thus providing incisive
management implications to navigate companies towards optimal operational efficiency
and contribution to an environmentally sustainable future.
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