Production Planning in the Inventory Limited Capacity Setting Assuming Permissible Storage Shortage Using Dynamic Programming Model

Attarian F., Javanmard H., Mardani A., Soltan E. K. H.

World Congress on Engineering 2009, London, Canada, 1 - 03 July 2009, pp.640-642 identifier

  • Publication Type: Conference Paper / Full Text
  • City: London
  • Country: Canada
  • Page Numbers: pp.640-642
  • Keywords: Inventory, Optinium solution, Back order, Production planning
  • Bursa Uludag University Affiliated: No

Abstract

In the production planning process, two main objectives are satisfying customer demand and achievement of the lowest cost which are sometimes incompatible aims. The increase of inventory level, for example, may result in increase of customer demand; although the holding costs arc often at very high level, so the total cost is not estimated at minimum level. Focusing on the minimal cost may cause failing to supply the customer demand and its consequence is loss for the company. In the present research, the situation is named as "inventory shortage". The main objective is to develop production planning model of Foulad Azarbayjan Company at Iran assuming inventory limited capacity and permissible storage shortage (backorder). In the line with the main objective, following results are obtained: (1) optimal production rate at the beginning and ending of each period, (2) minimal total cost,(3) inventory optimal level at the beginning of period, and (4) optimal back order rate.