The economic production lot size model under volume flexibility

Abstract

The classical economic production lot size (EPL) model assumes a predetermined and inflexible production rate. Production rate in many cases, such as orders filled by a machine, can be changed. Moreover, unit production cost depends on production rate. In this chapter, we extend the EPL model to cases where production rate is a decision variable. Unit production cost becomes a function of production rate. We solve the proposed model for special unit production cost functions and illustrate the results with a numerical example.