Alternative approach for production lot size problem with scrap and cost reduction distribution policy

Abstract

Conventional approach for solving replenishment lot size problem is by using the differential calculus with the need of applying the first-order and second-order differentiations to the long-run average production-inventory cost. A recent published paper used conventional method to determine optimal lot size for an integrated production-delivery system with scrap and cost lessening distribution policy. This paper uses an alternative algebraic approach to reexamine the aforementioned problem without referring to derivatives. As a result, optimal lot size and a simpler expression for the long-run average cost are derived, and they are identical to what were obtained by using the conventional method. Key words: Lot size, optimization, scrap, multiple distribution policy, algebraic approach, production planning.