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The economic production and pricing model with lot-size-dependent production cost

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  • Alireza Kabirian

Abstract

In this paper, the economic production quantity problem for a single-product single-machine system is extended. It is assumed that annual demand of the product is a function of price set by manufacturer. This extension considers sales revenue, inventory and setup costs as well as a variable cost of production which is a function of the lot size. Several linear and non-linear functions of demand and variable cost are considered in this paper and a global solution methodology is presented for the models developed. Newton’s method is used to find local optima and asymptotic convergence of the solution algorithm to a global optimum is proved. Numerical studies followed by a discussion provide additional insights into the problem. Copyright Springer Science+Business Media, LLC. 2012

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  • Alireza Kabirian, 2012. "The economic production and pricing model with lot-size-dependent production cost," Journal of Global Optimization, Springer, vol. 54(1), pages 1-15, September.
    • Handle: RePEc:spr:jglopt:v:54:y:2012:i:1:p:1-15
    DOI: 10.1007/s10898-011-9737-7
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    References listed on IDEAS

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