A Model for Determining Optimal Batch Sizes for Product Quality Assurance with Material- and Process-induced Variability under Open Supply Chain Environments

Abstract

This paper considers how the optimal batch size can be determined in open supply chain environments where a manufacturing enterprise needs to select a raw material supplier and an outsourced manufacturer with diverse quality levels and process capabilities. Engineering design requirements for assuring product quality are defined by means of geometric dimensioning and tolerancing (GD&T), and the notion of product quality in the supply chain environment is employed in matching a supplier and a manufacturer in assessing the total production cost. A mathematical model that considers stochastic characteristics of material-induced variability and process-induced variability brought by suppliers and manufacturers is developed. To determine the optimal batch size, twofold steps are applied so that a predetermined level of product quality can be met and the total cost of production can be minimized. An example is provided to illustrate the method to determine the optimal batch size and supplier-manufacturer pair at the same time.