Economic lot scheduling with uncontrolled co-production

Abstract

The aim of this paper is to analyze the effects of uncontrolled co-production on the production planning and lot scheduling of multiple products. Co-production occurs when a proportion of a certain production comes out as another product. This is typical in the process industry where quality and process specifications can lead to diversified products. We assume that there is no demand substitution and each product has its own market. Furthermore, we assume that co-production cannot be controlled due to technical and/or cost considerations. We introduce two models that extend the common cycle economic lot scheduling (ELSP) setting to include uncontrolled co-production. In the first model we do not allow for shortages and derive the optimal cycle time expression. In the second model, we allow for planned backorders and characterize the optimal solution in closed form. We provide a numerical study to gain insight about co-production. It seems that the cycle time increases with co-production rate and utilization of the system. The effect of co-production on long-term average cost does not exhibit a certain characteristic.