Abstract

This study overcomes the limitation of the classical lot sizing method developed on the basis of the single product and single stage assumption. The superstructure of the plant considered consists of a network of serially and/or parallelly interlinked processes and storage units. The processes involve chemical reactions with multiple feedstock materials and multiple products. The objective function for optimization is minimizing the total cost composed of setup and inventory holding costs as well as the capital costs of constructing processes and storage units. And the relative optimality of a certain process can be computed to help the sequence decision of optimizing works. The novel Periodic Square Wave (PSW) model was used to analyze production and inventory system. The advantage of the PSW model comes from the fact that the model provides a set of simple analytic solutions in spite of a detailed description of the material flow between processes and storage units. The resulting simple analytic solution can greatly enhance the proper and quick investment decision for plant design and operaton problem confronted in diverse economic situations.

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