Effects of cycle time on integrated procurement-production systems-Sensitivity analysis

Integrated procurement-production models offer scope for establishing a link between procurement and production policies when bought-out items are used in production. The model jointly determines economic order sizes for raw materials and economic batch sizes for products. A multistage, multiproduct batch production system with finite production rate is considered. The total variable cost consists of set-up, inventory carrying, raw material ordering and holding costs. The objective is to determine economic batch sizes for products and economic order sizes for raw materials. The manufacturing cycle time plays an important role in structuring, solving and applying these models. In practice, the possible choice of cycle times is limited. The economic impact of such a restriction is examined in this paper for integrated procurement-production systems.