Article ID: | iaor20072818 |
Country: | India |
Volume: | 43 |
Issue: | 4 |
Start Page Number: | 404 |
End Page Number: | 424 |
Publication Date: | Dec 2006 |
Journal: | OPSEARCH |
Authors: | Sarker Bhaba R., Diponegoro Ahmad |
The ordering policy of raw materials and the manufacturing batch size for frequent deliveries of finishing foods over a finite horizon play a significant role in managing the supply chain logistics economically. This research develops an ordering policy for raw materials and determines an economic batch size in a manufacturing system that supplies finished products to customers over a finite planning horizon. Fixed quantities of finished products are delivered to customers at a fixed interval of time. In this model, an optimal multi-ordering policy for procurement of raw materials and production cycle time for a production and supply system is developed to minimize the total cost incurred due to raw materials and finished goods inventories. A closed-form solution to the problem is obtained for the minimal total cost. A lower bound on the optimal solution is developed for the problem and the empirical tests indicate that the lower bounds are very close to the solution.