Simulated annealing for solving a manufacturing batch-sizing problem

This paper addresses the problem of a manufacturing system that procures raw materials from suppliers in a lot and processes them to convert into finished products. It proposes an ordering policy for raw materials to meet the requirements of a production facility. In turn, this facility must deliver finished products demanded by outside 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 demand on time. The solutions obtained were compared with those of traditional approaches. Numerical examples are presented.