Reducing raw material inventories for plastic components production

The special situation of a large plastic components producing company leads to an uncommon procedure to determine order quantities for its raw materials. The special structure of the problem arises because all costs are left out of consideration and the suppliers are not willing to deliver less than a specific minimum quantity. The authors developed a dynamic program to determine optimal order quantities for each individual supplier. Due to the complexity of the problem, a heuristic procedure of the greedy type determines order quantities for suppliers with many products.