Abstract

Conventional approach for solving replenishment lot size problem is by using the differential calculus with the need of applying the first-order and second-order differentiations to the long-run average production-inventory cost. A recent published paper used conventional method to determine optimal lot size for an integrated production-delivery system with scrap and cost lessening distribution policy. This paper uses an alternative algebraic approach to reexamine the aforementioned problem without referring to derivatives. As a result, optimal lot size and a simpler expression for the long-run average cost are derived, and they are identical to what were obtained by using the conventional method.

Key words: Lot size, optimization, scrap, multiple distribution policy, algebraic approach, production planning.