Lot-sizing Problems with Co-manufactured Parts
U. S. Palekar,* M. Bhatia
University of Illinois

The lot-sizing problem is concerned with multiperiod scheduling of part production to minimize set-up and inventory carrying cost. Traditionally, it is assumed that each part type can be produced independently of all other parts. However, there exist many situations where several parts are manufactured together as a nest to obtain savings in materials. Examples include cutting smaller rolls from a large roll of film or paper, cutting patterns from a sheet of metal or glass, and manufacturing different kinds of semiconductor chips from a wafer. The problem involves the selection of the optimal number of each nest to minimize setup, holding, scrap, and overage costs.