Minimizing the internal supply chains’ operating expenses is a crucial management goal in current transnational enterprises, where manufacturing and retailing often operate independently. Still, managers must periodically evaluate the consolidated operating expenses and performance. The operational goals in the manufacturing units consist of lowering quality- and reliability-relevant costs, avoiding manufacturing delays due to random breakdowns, and meeting order due dates through expediting strategies, such as partial subcontracting and accelerating the fabrication plan. Inspired by efforts to optimize batch runtime for the mentioned intra-supply chains, this study investigates the combined impact of quality-surety actions (including defect removal and rework), correction of breakdowns, multi-delivery, adjustable-rate, and outsourcing on a coordinated producer–retailer system. This study presents a research scheme comprising: (1) model development for the mentioned internal supply-chain features; and (2) optimization approaches for determining the cycle time decision that minimizes the overall system operating expenses. To conclude our work, we validate the research scheme, procedure, and results through numerical demonstration and show that it can effectively support management’s decision-making with various exploratory and crucial information.

When making a batch production decision for a buyer-vendor coordination system, the management must simultaneously consider the operating expenses incurred in in-house manufacturing and inventory, finished goods’ shipping, and stock holding at the retailer end. Achieving the operational goals of desirable quality, minimal production disruption, and shortening fabrication time help minimize overall in-house operating costs and maximize customer satisfaction. This work builds an operating cost minimization model for buyer-vendor coordination batch system with scrap, breakdowns, overtime, multi-shipment, and an external source to assist the management in optimizing their production-delivery plan. Removing inevitable scrap items ensures product quality, and correction action on stochastic equipment breakdown prevents unacceptable production delays. Implementing partial overtime and adopting an external source expedites in-house manufacturing time. Model construction and cost analysis enable us to decide the operating expense function. Then, we verify the function’s convexity and decide our model’s best manufacturing runtime with the differential calculus and a proposed algorithm. Furthermore, the numerical demonstrations are used to exhibit our work’s applicability and show what kinds of crucial in-depth information can be disclosed and made accessible to the production planners for their decision-making.