Management Production and Inventories: From EOQ/EPQ to ELSP and its extension with shelf life and transitive demand items
As part of her secondment to Riviera Produce, Pilar Vidal from UPV conducted a teaching session on “Management Production and Inventories: From EOQ/EPQ to ELSP and its extension with shelf life and transitive demand items“. At this session, the economic order quantity (EOQ) as one of the simplest and used models to control production and inventory was presented. Their extension to manufacturing systems, that is, economic production quantity (EPQ) was shown. How to implement basic production and inventory management policies using these models was detailed. The most basic inventory-management model is defined by the employed policy –reorder point (s,Q) periodic review (T,S), model (s,S) to name just a few- and its control parameters. It can be said that any of these models answer two basic questions: ‘when’ and ‘how much’ to order/manufacture. The ‘when’ question is usually addressed by either (or simultaneously) setting a stock level at which to reorder or stablishing specific moments of time when to reorder. The ‘how much’ question tends to be answered by either considering a stock level that serves as a reference to fill, or a fixed quantity that optimizes the affected costs. After that, Economic Lot Scheduling Problem (ELSP) was presented which occurs when EPQ deals with more than one item. The solution to the ELSP involves two critical decisions. On the one hand, there is the lot sizing problem. On the other hand, there is the scheduling decision, i.e. decide when items are produced so that the schedule is feasible. Some heuristics to implement ELSP approach were described. After that the particular case of a firm which package fresh vegetables was presented, describing the special characteristics of this framework regarding the management of the production and inventories.