Effect of production cost on shelf life

The authors consider a manufacturing system which produces a family of items and the production policy of the system is to produce all items in every production cycle. Some items can be stored in the inventory only for a certain shelf-life period which may be shorter than the production cycle time. If such problem arises, then the cycle-time period for which an item is stored in the inventory has to be reduced to less than or equal to the shelf life of that item to accommodate the feasible schedule. This storage time can be reduced by frequent replenishment of the items and consequently reducing the inventory held up in the store. This objective may be achieved by reducing either the total cycle time or the production rate, or by using a mix of reduced cycle time and production rate. This paper focuses on deciding the best of the first two known options: to reduce the production rate or to reduce the cycle time; the third option is not addressed here because of its complexity. An optimum quantity and its corresponding production cycle time, for each item are found using the standard economic order quantity model under constant and known demand rates. Although the computational results indicate that reducing the cycle time is better than reducing the production rate, the choice depends actually on the shelf life, machine-setup time, production-setup time, the production time (uptime) and unit costs.