Simultaneous Due Date Assignment and Lot Sizing with Uncertain Flow Times

Due date assignment for customer orders has been studied in various productionenvironments using different modeling approaches. In this paper the researchers consider aproduction system in which the orders of several customers are produced in a single batch because ofthe economy of scale. If a batch is completed before receiving customer orders, inventory carryingcost is incurred but if it is completed after receiving customer orders, shortage cost is incurred andfinally if the order is delivered after its due date, tardiness cost is charged. The problem is to decideon batch size, due date of batch (imposed on supply process) and lead time (to be quoted to the nextcoming customers) so that relevant costs are minimized. The objective function is to minimize totalcost of supply, inventory carrying, shortage and tardiness. Production flow times are probabilisticwhich follow a probability distribution. The proposed model is solved using real-coded geneticalgorithms and numerical results are presented. This work was motivated by a heavy equipmentproduction system which has some products with relatively low demand rates, high prices and longsupply lead times.