ECONOMIC ORDER QUANTITIES BASED ON UNIT-LOAD AND MATERIAL-HANDLING CONSIDERATIONS

In this paper, an important but frequently overlooked aspect of production batch-size planning is addressed: namely, the consideration of unit load and material handling. Thus, an additional cost factor to account for the transportation of unit loads is incorporated in the total cost function which is typically broken down into reorder cost, inventory holding cost, and backorder cost. A cost minimization model is developed that includes constraints related to volume and weight restrictions on unit loads and in-process storage space. A dynamic programming procedure is utilized to find the minimum cost solution. An example problem is also given.