An optimal batch size for a production system operating under periodic delivery policy

A manufacturing system that procures raw materials from suppliers in a lot and processes them into a finished product is considered in this research. An ordering policy is proposed for raw materials to meet the requirements of a production facility which, in turn, must deliver finished products demanded by outside buyers at fixed points in time. First, a general cost model is formulated considering both raw materials and finished products. Then, using this model, a simple procedure is developed to determine an optimal ordering policy for procurement of raw materials, and the manufacturing batch size, to minimize the total cost of meeting customer demands in time. The dependent relationships between production batch size and raw material purchasing quantity, and various delivery patterns considered in recent literature are critically reviewed. The quality of the solution is evaluated. Numerical examples are provided.