Optimal lot size for a multistage multi-cycle production process. (c2010)

Abstract

The traditional production lot size model assumes that the production process consists of a single stage and the only costs used to determine the optimal lot size are the setup cost and the holding cost of the finished product. This research extends the production lot size model to a multistage mutlicycle production process that accounts for the various costs involved in the production of an item. Mathematical models are developed and closed form formulas for determining the optimal lot size are obtained. The uniqueness of the optimal solution is demonstrated and numerical examples are given to illustrate and analyze the model. In chapter one, a background on inventory models is presented and a literature review is given. Chapter two is about reviewing the classical EOQ and EPQ models in addition to two models developed recently by Salemeh & EI-Kassar and El-Kassar & Dah. The two models account for the holding cost of raw material and the effect of time discounting. In chapter three, the production lot size model is extended to a multistage production process that accounts for the various costs involved in the production of an item. In chapter four, the multistage model is generalized to a model where each stage of production contains more than one cycles of the subsequent stages. In chapter five, a conclusion is given and some future research topics are proposed.