JOINT ECONOMIC LOT-SIZE (JELS) MODEL WITH LOT-SPLITTING METHOD AND JUST-IN-TIME (JIT) PRODUCTION SYSTEM

Abstract

Production control is something important in the business especially in manufacturing. Inventory levels must remain at optimal conditions in order to produce maximum profits. Accepting models such as EOQ and EPQ that we have known can control inventory levels to remain optimal, but the proposed model can only control inventory levels for one party, so that one party will be benefited whereas the other party will be disadvantaged.In recent years, an integrated model was developed between suppliers and buyers which aims to optimize supplier’s and buyer’s inventory levels so the profit can be obtained by both parties. The inventory model was named the Joint Economic Lot-Size (JELS) model. Furthermore, the selection of a production system is not less important. In this case, the production system that will be used is the Just-in-Time (JIT) production system which intend to minimize the excess inventory. Method that used to minimize the inventory cost is the lot-splitting method where the initial lots will be splitted into the smaller-size that ready to be delivered. So, there will be multiple shipments in accordance with the Single Setup Multiple Delivery (SSMD) policy. Optimal inventory levels (in this case reaching the minimum level) will provide a number of benefits for business performer. As examples, save the maintenance and inspection of goods costs and early detection of defect good. Therefore, the total costs incurred by the second party will decrease and the profits obtained will be more leverage Keywords : Joint-Economic-Lot-Size model, JELS, Production system, Just-inTime JIT, Lot-Spliting, SSMD