A fast-response production-inventory model for deteriorating seasonal products with learning in set-ups

The classical production-inventory model assumes that both demand and set-up costs are constant. However, in real manufacturing environment, managers usually embark on continuous improvement programmes that often lead to more effective use of tools and machineries and consequently reduction in set-up costs. In fact, constant emphasis on reduction of set-up costs is usually cited as one of the factors responsible for the efficiency of Japanese manufacturing methods. On the other hand, the demand for seasonal product is often characterized by a mixture of time-dependent patterns over the entire season. This paper investigates the effect of learning-based reduction in set-up costs on the optimal schedules and costs of a production-inventory system for deteriorating seasonal products. The demand pattern is a general three-phase ramp-type demand function that represents the various phases of demand commonly observed in many seasonal products in the market. A two-parameter Weibull-distribution function is used for the deterioration of items in order to make the model more generalized and realistic. The study further presents two different multi-period production strategies that can ensure a fast-response to customers’ demand and compare them with the usual single period strategy. The Numerical example and sensitivity analysis shows that learning-based reduction in set-up costs leads to higher production frequency and shorter production runs which are vital aspects of the just-in-time (JIT) philosophy.