Interchange of the holding/shortage costs in multiproduct manufacture

Abstract

In the context of cyclic manufacturing, multiple items are produced in a common cycle time. Relevant total cost is formulated, including various parameters such as inventory holding cost and manufacturing facility set-up cost. This total cost is optimized and cycle time is computed. For internal benchmarking or continuous improvement, the production rates of two items have been interchanged in previous researches. The present work focuses on interchange of the inventory holding costs of two items in multiproduct engineering manufacture. The work is also extended to swapping the shortage costs. Effects on the costs are analysed, and conditions are developed for guaranteed cost improvement. A conscious effort in industries to implement the proposed method is expected to be useful in productivity improvement.