Title: Optimal batch ordering over a finite planning horizon

Authors: Abdullah O. Alsuwainea; Lakdere Benkherouf; Suresh P. Sethi

Addresses: Department of Statistics and Operations Research, College of Science, Kuwait University, P.O. Box 5969, Safat 13060, Kuwait ' Department of Statistics and Operations Research, College of Science, Kuwait University, P.O. Box 5969, Safat 13060, Kuwait ' Jindal School of Management, The University of Texas at Dallas, 800 W. Campbell Rd., Richardson, Texas 75080-3021, USA

Abstract: This paper is concerned with finding an optimal inventory policy for a finite horizon, two-stage inventory model. In this model, products may be manufactured in two stages. The first stage uses raw material from an external supplier and the second stage uses raw material from defective items that were returned and repaired during the first stage. The problem of jointly finding the optimal procurement of raw materials and the production plan is formulated as a mixed-integer, non-linear programming problem. A solution procedure for the problem is proposed. The suggested procedure is based on the work of Benkherouf and Gilding (2009).

Keywords: inventory modelling; optimal inventory policy; finite horizon models; batch ordering; finite planning horizon; optimisation; materials procurement; production planning; mixed-integer nonlinear programming; MINLP.

DOI: 10.1504/IJOR.2014.060412

International Journal of Operational Research, 2014 Vol.19 No.4, pp.385 - 406

Published online: 17 Jun 2014 *

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