Optimal lotsize decisions for a foundry

In order to model lotsize decisions in a foundry an extension to the classical economic order quantity is introduced. The foundry faces cyclic demand with a finite demand rate due to lotsize production in the next production stage. In addition to the lotsize one has to decide how many machines to use for parallel production. Machines can either be utilized for just one product, permanently or in intermittent production. A simple algorithm for finding an optimal stationary lotsize policy is given. The savings are demonstrated by applying the procedure to the data of three typical products. Furthermore, results about the structure of an optimal lotsize policy are directly applicable for the lotsize decisions in the foundry.