A Lot-for-Lot Model with Multiple Instalments for a Production System under Time-Varying Demand Process

Abstract

In manufacturing systems, the quantity of raw material needed in production is dependent on the production size. In this paper we consider a manufacturing system which procures raw materials from suppliers and processes them to make a finished product. The problems are to determine an ordering policy for raw materials (a lot with multiple instalments) and a production policy for the finished product to satisfy a deterministic time-varying demand process. We find an optimal solution for the model by using the Solver of Microsoft Excel. We present some numerical examples for a discussion. Keywords: Batch size; Manufacturing system; Time-varying demand; Optimization; Integrated inventory.