The Effect of Externalizing Setups in the Economic Lot Scheduling Problem

This paper considers the Economic Lot Scheduling Problem with Reducible Setup Times (ELSP-RS), that is, determining a multiple product, single facility cyclic schedule to minimize holding and setup costs when setup times can be reduced, at the expense of setup costs, by externalizing setup operations. We develop an efficient algorithm that finds an optimal or near-optimal production schedule. Computational results indicate that dramatic savings are possible for highly utilized facilities.