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Joint inventory and technology selection decisions

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  • Khouja, Moutaz

Abstract

In some manufacturing systems, the type of production technology selected dictates the lot size, or sets an upper limit on it. In this paper, we formulate a model in which the lot sizing decision has to be made at the technology selection stage. Furthermore, the cost of the technology depends on the lot size it can produce. The problem is addressed under two different assumptions about demand. First demand is assumed to be constant. A closed-form expression for the optimal lot size is derived for this case. Second, demand is assumed to be linearly decreasing. Using an accurate approximation to the total cost function, a closed-form expression for the optimal lot size is derived. We illustrate the models with numerical examples.

Suggested Citation

  • Khouja, Moutaz, 2005. "Joint inventory and technology selection decisions," Omega, Elsevier, vol. 33(1), pages 47-53, February.
    • Handle: RePEc:eee:jomega:v:33:y:2005:i:1:p:47-53
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    References listed on IDEAS

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    1. Lo, Wen-Yang & Tsai, Chih-Hung & Li, Rong-Kwei, 2002. "Exact solution of inventory replenishment policy for a linear trend in demand - two-equation model," International Journal of Production Economics, Elsevier, vol. 76(2), pages 111-120, March.
    2. Hill, Roger M. & Omar, Mohd & Smith, David K., 1999. "Stock replenishment policies for a stochastic exponentially-declining demand process," European Journal of Operational Research, Elsevier, vol. 116(2), pages 374-388, July.
    3. Goyal, S. K. & Giri, B. C., 2003. "A simple rule for determining replenishment intervals of an inventory item with linear decreasing demand rate," International Journal of Production Economics, Elsevier, vol. 83(2), pages 139-142, February.
    4. Zhao, G. Q. & Yang, J. & Rand, G. K., 2001. "Heuristics for replenishment with linear decreasing demand," International Journal of Production Economics, Elsevier, vol. 69(3), pages 339-345, February.
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    Cited by:

    1. Wu, Chin-Chun & Chou, Chao-Yu & Huang, Chikong, 2009. "Optimal price, warranty length and production rate for free replacement policy in the static demand market," Omega, Elsevier, vol. 37(1), pages 29-39, February.
    2. Tan, Kim Hua & Noble, James & Sato, Yuji & Tse, Ying Kei, 2011. "A marginal analysis guided technology evaluation and selection," International Journal of Production Economics, Elsevier, vol. 131(1), pages 15-21, May.

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