We consider a single machine scheduling problem where components of N different types are made and then assembled to final products of a single type. The fixed setup time and the setup cost occur whenever the machine is switched from production of one type to another. The demand for the final products is assumed to be constant and the planning time horizon is infinite. We propose a heuristic batching and sequencing algorithm which is based on a repetitive schedule to minimize the total production cost. The total production cost consists of work-in-process inventory costs of components, setup costs, and the inventory holding cost plus the cost of completing orders for the final products. We demonstrate that our algorithm is superior to the well known lot sizing (Economic Order Quantity) rule for the problem. An example is also given to illustrate the solution procedure.
