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Simulated annealing and joint manufacturing batch-sizing

We address an important problem of a manufacturing system. The system procures raw materials from outside suppliers in a lot and processes them to produce finished goods. It proposes an ordering policy for raw materials to meet the requirements of a production facility. | Yugoslav Journal of Operations Research 13 (2003), Number 2, 245-259 SIMULATED ANNEALING AND JOINT MANUFACTURING BATCH-SIZING Ruhul SARKER School of Computer Science, The University of New South Wales, ADFA, Canberra, Australia. Xin YAO School of Computer Science, The University of Birmingham, Edgbaston, Birmingham, UK. Abstract: We address an important problem of a manufacturing system. The system procures raw materials from outside suppliers in a lot and processes them to produce finished goods. It proposes an ordering policy for raw materials to meet the requirements of a production facility. In return, this facility has to deliver finished products demanded by external buyers at fixed time intervals. First, a general cost model is developed considering both raw materials and finished products. Then this model is used to develop a simulated annealing approach to determining an optimal ordering policy for procurement of raw materials and also for the manufacturing batch size to minimize the total cost for meeting customer demands in time. The solutions obtained were compared with those of traditional approaches. Numerical examples are presented. Keywords: Inventory, procurement, periodic delivery, optimum order quantity, heuristic, simulated annealing. 1. INTRODUCTION We discuss a manufacturing system where the manufacturer uses raw material, received from an outside supplier, so to produce a finished product. Traditionally the economic lot size for raw material purchase and manufacturing batch size are determined separately. However, when the raw material is used in production, its ordering quantities are dependent on the batch quantity of the product. Therefore, it is undesirable to separate the problem of economic purchase of raw materials from economic batch quantity. As a result, one should determine the optimum production 246 R. Sarker, X. Yao / Simulated Annealing and Joint Manufacturing Batch-Sizing batch size of a product and the ordering .