A lot-sizing model for just-in-time manufacturing

The authors consider the problem of determining lot sizes of multiple items that are manufactured by a single capacitated facility. The manufacturing facility may represent a bottleneck processing activity on the shop floor or a storeroom that provides components to the shop floor. Items flow from the facility to a downstream facility, where they are assembled according to a specified mix. Just-in-time (JIT) manufacturing requires a balanced flow of items, in the proper mix, between successive facilities. The present model determines lot sizes of the various items based on the available capacity and four attributes of each item: demand rate, holding cost, set-up time and processing time. Holding costs for each item accrue until the appropriate mix of items is available for shipment downstream. The authors develop a lot-sizing heuristic that minimizes total holding cost per time unit over all items, subject to capacity availability and the required mix of items.