Economic lot scheduling problem with raw material considerations

The authors extend the traditional model of the economic lot scheduling problem by considering various issues associated with the management of the raw materials for production. Several items are produced on a single machine at finite production rates with setup times, and setup and inventory holding costs. Raw materials are used for the production of these items. In the presence of setup and holding costs for the raw materials, the authors first formulate a planning model which provides a sharp lower bound on the cost of any policy for the problem. The solution is used to obtain policies which are guaranteed to be very close to optimal in the worst case. Finally, the authors consider the problem of obtaining good feasible schedules for both the machine and the raw materials.