Implementing an optimal policy for set-up time reduction in an economic production quantity model

An economic production quantity (EPQ) system consisting of single and multiple items with an optimal policy of set-up time reduction and a fixed increment cost are discussed in the present study. The set-up time reduction ratio as a decision variable under various cases of demand in the EPQ model is considered. It is assumed that the set-up cost is linearly related to the set-up time. The set-up time reduction ratio and the lot size are solved simultaneously to obtain an optimal value of the total annual cost. Numerical examples are presented to demonstrate the accuracy of the proposed method.