EFFECTS OF WIP INVENTORIES ON INTEGRATED PRODUCTION LOT-SIZING IN CELLULAR MANUFACTURING

This paper studies the effects of work-in-process (WIP) inventory on t he simultaneous determination of the optimal production batch sizes of the single product and its component parts, where the component parts , processed in manufacturing cells, are assembled into the product. We develop a procedure to simultaneously find the optimal lot size for t he product and its component parts and the total relevant cost. The ef fect of setup reduction is considered. A numerical example demonstrate s that, in the lot size computation, the WIP inventory costs and the r elationship between the product and its component parts should all be taken into account.