LOT-SIZING WHEN YIELDS INCREASE DURING THE PRODUCTION RUN

We investigate the problem of determining lot sizes for multiple items when the expected percentage of acceptable output increases with the duration of the production run, usually due to adjustments made during the early part of the production run. Such problems arise in metal st amping, textile finishing processes, and a variety of other industries . The goal is to minimize the total cost of production, inventory hold ing costs, and setup costs (where applicable). We develop a heuristic procedure based on a Lagrangian relaxation that differs from relaxatio ns used in earlier studies. We use various properties of the objective function to guide the adjustment of the initial solution from the rel axation toward feasibility. Computational results indicate that, on th e average, the heuristic produces solutions within 4.9% of the lower b ound obtained from the Lagrangian relaxation. (C) 1996 John Wiley & So ns, Inc.