Optimal lot sizing in manufacturing revisited

The lot sizing problem with non-instantaneous delivery and continuous consumption of manufactured items has been extensively investigated incorporating various nonmanufacturing related cost and lot size variables. When the production cost per unit and the time per unit are functions of controllable manufacturing process variables, the selection of process variables impacts on the total stocking cost and the Economic Lot Size(EOQ). The EOQ in this context does not necessarily correspond to what may result if minimum production cost parameters are used. Furthermore, other constraints like maximum in-process inventory allowed, range of production rate allowed etc requires non-linear optimization techniques to solve the EOQ problem. This paper discusses these issues.