Abstract
Abstract A new production-planning model with a unique set of realistic features is considered. First, the demand rate is a function of the current inventory level. Second, a new order is gradually produced according to a finite production rate. Third, the unit holding cost per time period is a function of both the unit purchase cost and the storage time duration. Fourth, the unit purchase cost is a function of the production lot size. Fifth, the starting/ending inventory for each cycle is a decision variable to be optimized. Finally, the objective of the model is to maximize the total profit per unit time. The purchase cost per unit decreases with larger lot size according to all-units quantity discount. On the other hand, the holding cost per unit increases with longer storage duration, either retroactively or incrementally. Mathematical models are formulated to represent this production planning system, and optimum solution procedures are developed.
Highlights
Numerous types of production and inventory control models have been proposed in the literature
These assumptions include the following: constant demand rate, infinite production rate, constant unit purchase cost, constant unit holding cost, zero initial/end inventory, and minimum-cost objective. These assumptions generally facilitate the formulation and solution of such models, they make these models less representative of real-life situations. By replacing these simplifying assumptions by realistic ones, a practical production and inventory control model is proposed in this paper
This paper presented mathematical models and solution procedures for a production planning system with several realistic features
Summary
Numerous types of production and inventory control models have been proposed in the literature. Different versions of these models are based on various combinations of typical simplifying assumptions These assumptions include the following: constant demand rate, infinite production rate, constant unit purchase cost, constant unit holding cost, zero initial/end inventory, and minimum-cost objective. These assumptions generally facilitate the formulation and solution of such models, they make these models less representative of real-life situations. By replacing these simplifying assumptions by realistic ones, a practical production and inventory control model is proposed in this paper.
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