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Economic Order Quantities in production: From Harris to Economic Lot Scheduling Problems

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  • Holmbom, Martin
  • Segerstedt, Anders

Abstract

This article provides a short historical overview from Harris and his Economic Order Quantity (EOQ) formula to the Economic Lot Scheduling Problem (ELSP). The aim is to describe the development of the ELSP field from the EOQ formula to the advanced methods of today in a manner that suits master and graduate students. The article shows the complexities, difficulties and possibilities of scheduling and producing several different items in a single production facility with constrained capacity. The items have different demand, cost, operation time and set-up time. Set-up time consumes capacity and makes the scheduling more complicated. Idle time makes the scheduling easier but is bad from a practical point of view since it creates unnecessary costs due to low utilisation of the facility. A heuristic solution method is used on a small numerical example to illustrate different solution approaches. The solution method creates a detailed schedule and estimates the correct set-up and inventory holding cost even if the facility works close to its capacity.

Suggested Citation

  • Holmbom, Martin & Segerstedt, Anders, 2014. "Economic Order Quantities in production: From Harris to Economic Lot Scheduling Problems," International Journal of Production Economics, Elsevier, vol. 155(C), pages 82-90.
    • Handle: RePEc:eee:proeco:v:155:y:2014:i:c:p:82-90
    DOI: 10.1016/j.ijpe.2014.03.024
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    2. Brahimi, Nadjib & Absi, Nabil & Dauzère-Pérès, Stéphane & Nordli, Atle, 2017. "Single-item dynamic lot-sizing problems: An updated survey," European Journal of Operational Research, Elsevier, vol. 263(3), pages 838-863.
    3. Lazhar Tlili & Anis Chelbi & Rim Gharyani & Wajdi Trabelsi, 2024. "Optimal Preventive Maintenance Policy for Equipment Rented under Free Leasing as a Contributor to Sustainable Development," Sustainability, MDPI, vol. 16(9), pages 1-24, May.
    4. Alexander Grigoriev & Vincent J. Kreuzen & Tim Oosterwijk, 2021. "Cyclic lot-sizing problems with sequencing costs," Journal of Scheduling, Springer, vol. 24(2), pages 123-135, April.
    5. Tasdemir, Cagatay & Hiziroglu, Salim, 2019. "Achieving cost efficiency through increased inventory leanness: Evidences from oriented strand board (OSB) industry," International Journal of Production Economics, Elsevier, vol. 208(C), pages 412-433.
    6. Flavio Molina & Reinaldo Morabito & Silvio Alexandre de Araujo, 2016. "MIP models for production lot sizing problems with distribution costs and cargo arrangement," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(11), pages 1395-1407, November.

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