The Optimal Lot Sizing for Unreliable Economic Manufacturing Model

Abstract

This paper considers the optimal policy for an economic manufacturing model with stochastic machine breakdown and repair. The expected cost function is formulated and the optimal age replacement-like policy which minimizes it is derived analytically. The detailed properties on the resulting optimal lot size are examined for some special cases. Finally, numerical examples are devoted to show that the effect of corrective maintenance operation in the production process is remarkable.