Determination of optimal production rates on a single facility with dependent mold lifespan

In this paper, we consider a situation where several dedicated items are produced on a single facility and production rates can be controlled within maximum and minimum limits. Thus, this problem is a modification of the economic lot scheduling problem. We also take into account two different manufacturing costs that are functions of the production rate: (1) operating cost of the facility, and (2) mold cost. Operating cost is modeled as a linearly increasing function of the ratio between demand rate and production rate. Mold cost is modeled as an exponentially decreasing function. A mathematical model is developed and a heuristic iterative solution procedure is suggested. The objective of this problem is to minimize annual production-related cost in a model whose decision variables are common production cycle time and production rate for each product.