Production lot sizing problem with sudden obsolescence and machine breakdowns

Abstract

In this paper, an unreliable production system that produces a particular product subject to sudden obsolescence is studied. The purpose of this work is to develop an integrated product obsolescence and machine breakdowns inventory model for determining the optimal lot size that minimizes operating costs during product lifetime. Assuming that both machine failure and product obsolescence occur according to an exponential distribution, the expression for the cost function is offered. The numerical results show that both failure rate and product lifetime have significant impact in determining the optimal lot size of the integrated model.