Simulated annealing and joint manufacturing batch-sizing

We address an important problem of a manufacturing system. The system procures raw materials from outside suppliers in a lot and processes them to produce finished goods. It proposes an ordering policy for raw materials to meet the requirements of a production facility. In return, this facility has to deliver finished products demanded by external buyers at fixed time intervals. First, a general cost model is developed considering both raw materials and finished products. Then this model is used to develop a simulated annealing approach to determining an optimal ordering policy for procurement of raw materials and also for the manufacturing batch size to minimize the total cost for meeting customer demands in time. The solutions obtained were compared with those of traditional approaches. Numerical examples are presented.