Integrated production-inventory models for multi-products on a single facility

Abstract

In many industries, it is not difficult to find that multi-products are produced on the same production facility. A major problem of such industries is how to determine the production schedule and how much and when to procure the raw materials for the products. This study is concerned with two echelon production-inventory models which integrate the production planning problem of the multi-products producted on a single facility and the inventory problem of the related raw materials. The objective of each model is to simultaneously determine the production schedule of the final products and procurement policies of the raw materials in a way that minimizes the total annual variable cost. This thesis consists of the following four parts. 1) An integrated model of two final products and their related raw materials is developed based on "basic period approach". 2) The first model is extended to the case that some raw materials are deteriorating over time with constant rates. 3) The model of two final products is extended to the general m-products. Contrary to the first two models, the production schedule of this model assumes "common cycle approach". 4) The last part of this thesis deals with the situation where set up costs of the final products are dependent on the production sequence of the products. In each model developed, a heuristic iterative solution algorithm is suggested and illustrated with numerical example. And the result is compared with the solutions of two separate problems, the production scheduling problem of the final products and the procurement problem of the raw materials.