Operations Dept. Seminar
The Economic Production and Pricing Model with Lot-Size-Dependent Production Cost
Sponsored by: Dept. of Operations
Speaker(s): Alireza Kabirian, Cal State Univ-Northridge
Date & Time: Monday, Jan. 13, 2014 from 9 a.m. to 10:30 a.m.
In this research, the economic production quantity problem for a single-product single-machine system is extended. It is assumed that annual demand of the product is a function of price set by manufacturers. This extension considers sales revenue, inventory and setup costs as well as a variable cost of production which is a function of the lot size. Several linear and non-linear functions of demand and variable cost are considered and a global solution methodology is present for the models developed. Newton’s method is used to find local optima and asymptotic convergence of the solution algorithm to a global optimum is proved. Numerical studies followed by a discussion provide additional insights into the problem.
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