A Production Inventory Model for Producing Two-Products at a Single Facility with Deteriorating Raw Materials

Abstract

In this paper, a production inventory model is developed which integrates the production planning problem of the two-products produced on a single facility and the inventory replenishment problem of the related raw materials which may be deteriorating over time with a constant rate of The objective is to simultaneously determine the production schedule based on the basic period approach of the economic lot scheduling problem and the procurement policy of the raw materials in a way that minimizes the total annual variable cost. An iterative heuristic solution procedure is suggested and illustrated with a numerical example.