Abstract
This paper addresses the integrated scheduling and lot-sizing problem in a manufacturing environment which produces complex assemblies. Given the due-dates of the end items, the objective is to minimize the cumulative lead time of the production schedule (total makespan) and reduce set-up and inventory holding costs. A JIT production strategy is adopted in which production is scheduled as late as possible (to minimize WIP costs), but without backlogging end items. The integrated scheduling and lot-sizing problem within such an environment has been formulated and is NP hard. An efficient heuristic is developed that schedules operations by exploiting the critical path of a network and iteratively groups orders to determine lot-sizes that minimize the makespan as well as set-up and holding costs. The performance of the proposed heuristic is evaluated and numerical results are presented comparing the savings achieved in makespan and cost over a lot-for-lot production strategy, and scheduling using an existing heuristic. More generally, this study demonstrates that lot-for-lot production in small batches may not be the best JIT strategy in an assembly environment with finite set-ups.