Optimal Batch Size and Raw Material Ordering Policy for a Multi-Stage Production System

Bhaba and Gyana (1996) had developed a model of optimal hatch sine and raw material ordering policy for a prodnction system. However, their model is limited to a single-stage production system. In this paper, we extend their model to case where the production system is a mult.i-stage production system. We first build a model in which an optimal hatch size in all stages, raw material ordering lot size and semi-finished products transportation lot. size between two stages are developed to mininize the total cost. Then we analyze the sensitivity of the ordering cost of the raw materials, transportation cost. of semi-finished products for each hatch and manufacturing setup cost for each hatch. Finally, we analyze the problem that raw material ordering policy, optimal hatch size and total cost are influenced by the changing of the ordering cost, of the raw materials, transportation cost of semifinished products for each hatch and manufacturing setup cost for each batch and the integer approximation.