Optimal and heuristic policies for lot sizing with learning in setups

Optimal and heuristic policies for lot sizing with learning in setups

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Article ID: iaor1996794
Country: United States
Volume: 13
Issue: 3
Start Page Number: 229
End Page Number: 245
Publication Date: Oct 1995
Journal: Journal of Operations Management
Authors: ,
Keywords: heuristics
Abstract:

The authors develop heuristic and optimal methods for determining lot sizes when setup cost reductions occur over time due to emphasis on continuous improvement, learning effects and incremental process changes. The present heuristic methods are intuitively appealing, easy to implement, require little information about setup costs, and have low computational burden. Computational studies show that choosing the appropriate heuristic yields nearly optimal solutions. Recommendations for choosing the appropriate heuristic are also provided. The optimal method developed in this paper is also useful to managers for evaluating investments in hardware and/or worker training for setup reduction. Concepts and methods are illustrated with numerical examples. Managerial implications of using the present policies are discussed.

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