Optimal batch size and raw material ordering policy for a production system with a fixed-interval, lumpy demand delivery system

The paper develops an ordering policy for raw materials, to meet the demands of a production facility which supplies a fixed quantity of finished products to outside buyers, at a fixed interval of time. In this model, an optimal multi-order policy for procurement of raw materials for a single manufacturing batch is developed to minimize the total cost. An integer approximation is adopted to refine the optimal solution. A worst-case scenario is also analyzed to demonstrate the effect of the setup costs on the total cost of the inventory system.