A Just-in-Time Inventory Model with Preventive Maintenance and Defect Rate

In competitive market environments, businesses employ Just-In-Time (JIT) systems not only to reduce costs, but also to enhance their business partnerships. Although product quality level is essential for maintaining competitiveness, traditional inventory models do not consider defect rate, which is the main determinant of product quality. Also, in real working environments, machines break down after long operating times, which increases product defect rate. Therefore, an effective preventive maintenance policy is needed to ensure that machinery is reliable. Reworking defective items is another important inventory problem. To answer the above questions regarding varying defect rate, preventive maintenance and rework, this study developed an integrated two-echelon inventory model to determine the best production quantity, delivery frequency and preventive maintenance schedule under JIT production and delivery policy. The model results can be used to minimize total cost.