Decision Sciences Journal
Volume 32, Number 3
Summer 2001
Economic Production Lot Sizing with Periodic Costs and Overtime
E. Powell Robinson Jr. and Funda Sahin
Lowry Mays College and Graduate School of Business, Department
of Information and Operations Management, Texas A&M University,
College Station, TX 77843-4217, email: probinson@cgsb.tamu.edu
and fsahin@cgsb.tamu.edu
ABSTRACT. Traditional approaches for modeling economic
production lot-sizing problems assume that a single, fixed equipment
setup cost is incurred each time a product is run, regardless
of the quantity manufactured. This permits multiple days of production
from one production setup. In this paper, we extend the model
to consider additional fixed charges, such as cleanup or inspection
costs, that are associated with each time period’s production.
This manufacturing cost structure is common in the food, chemical,
and pharmaceutical industries, where process equipment must be
sanitized between item changeovers and at the end of each day’s
production. We propose two mathematical problem formulations
and optimization algorithms. The models’ unique features
include regular time production constraints, a fixed charge for
each time period’s production, and the availability of overtime
production capacity. Experimental results indicate the conditions
under which our algorithms’ performance is superior to traditional
approaches. We also test the procedures on a set of lot-sizing
problems facing a national food processor and document their
potential economic benefit.
Subject Areas: Inventory Management, Lot Sizing, Optimization,
Production and Inventory Control Systems. |