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Concepts, Theory, and Techniques A JOINT LOT‐SIZING RULE FOR FIXED LABOR‐COST SITUATIONS
Author(s) -
Pinto Peter A.,
Mabert Vincent A.
Publication year - 1986
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1986.tb00217.x
Subject(s) - sizing , computer science , operations research , scheduling (production processes) , fixed cost , production (economics) , order (exchange) , kanban , holding cost , joint (building) , mathematical optimization , operations management , economics , microeconomics , engineering , mathematics , architectural engineering , art , finance , visual arts
Many American firms are implementing just‐in‐time production in order to minimize inventories, reduce flow time, and maximize resource utilization. These firms recognize that, in the short run, setup costs really are fixed expenses and it is available capacity which is the critical factor in determining production‐run quantities. We propose using available capacity to increase the number of setups and reduce lot‐size inventories. This results in improved relevant cost performance. Sugimori, Kusunoki, Cho, and Uchikawa [16] in their paper on the Toyota kanban system developed a relationship for lead time but failed to use it for lot sizing. We use this relationship to develop the joint lot‐sizing rule. The efficacy of our proposed rule is demonstrated by applying it to lot‐size scheduling problems at the John Deere Engine Works [14]. Extensions of the proposed rule to undercapacity situations with material‐wastage costs in the setup processes and to multistate production inventory systems also are discussed.