EPQ models with varying setup cost
In this paper, the classical economic production quantity (EPQ) model is generalized by considering a relationship between the setup cost and the production run length. The dependency between the setup cost and run length can be related to process deterioration and learning and forgetting effects. Two models are developed, the first of which is for the case when shortages are not allowed and the other one permits shortages. The cost functions associated with these models are proved to be convex and optimal solutions are determined. Results show that the relationship between setup cost and production run length has a significant impact on the optimal lot size and average total cost in the EPQ model. Numerical examples are presented to demonstrate the utility of the models.
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- Jaber, Mohamad Y. & Bonney, Maurice, 2003. "Lot sizing with learning and forgetting in set-ups and in product quality," International Journal of Production Economics, Elsevier, vol. 83(1), pages 95-111, January.
- John P. Leschke & Elliott N. Weiss, 1997. "The Multi-Item Setup-Reduction Investment-Allocation Problem with Continuous Investment-Cost Functions," Management Science, INFORMS, vol. 43(6), pages 890-894, June.
- Freimer, Michael & Thomas, Douglas & Tyworth, John, 2006. "The value of setup cost reduction and process improvement for the economic production quantity model with defects," European Journal of Operational Research, Elsevier, vol. 173(1), pages 241-251, August.
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