Evaluating capacity change and setup time reduction in a capacity-constrained, joint lot sizing situation

We develop a simple decision model which can be used for determining the optimum levels of order quantity, order cycle, and capacity change for a capacity-constrained, single-stage joint lot sizing/scheduling (JLS) situation. The model solution (i.e., capacity change) can also be converted into an equivalent setup time reduction. Thus, the model can be used to evaluate the effectiveness of capacity change and setup reduction alternatives. Therefore, the proposed model extends the capability for analysis over that of current JLS approaches.