Cost-effective production policy for a stochastic unreliable manufacturing system

The paper deals with an economic manufacturing quantity (EMQ) problem for an unreliable manufacturing system in both continuous- and discrete-time settings. The time to machine failure and corrective and preventive repair times of the production facility are assumed to follow arbitrary probability distributions. The traditional method of determining the EMQ policy for a failure-prone manufacturing system is based on the minimization of the long-run average cost in the steady state. In this paper, an alternative criterion of optimality called cost effectiveness is introduced. The criteria for the existence and uniqueness of the optimal production time maximizing the cost effectiveness are derived analytically under general failure and specific repair (corrective and preventive) time distributions. The optimal cost-effective and average cost production policies are numerically calculated and compared in terms of their performances.