OPTIMIZING AN INTEGRATED INVENTORY SYSTEM UNDER DETERMINISTIC DEMAND

Abstract

We seek a better understanding of an inventory system to simultaneously determine the optimal manufacturing cycle for the product and the optimal procurement quantities for the raw materials. We show that the problem under consideration is NP-hard with a unique optimum. We further show the relation of the problem to the other single machine problems. We conclude that any iterative algorithm for solving single machine problems can be employed to solve this problem. A typical inventory system is worked out to illustrate the method.