Note---Can a Reduction in Set Up Costs Indeed Increase Total Costs?

Yigal Gerchak
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Yigal Gerchak: Department of Management Sciences, University of Waterloo, Waterloo, Ontario, Canada N2L 3G1

Management Science, 1988, vol. 34, issue 10, 1271-1272

Abstract: Zangwill (Zangwill, W. I. 1987. From EOQ towards ZI. Management Sci. 33 1209--1223.) has constructed an example which purports to show that reducing set up costs can increase total cost. We show that this happened as a result of restricting the policies to be of a "greedy" nature. The expected cost of truly optimal policies is shown not to increase.

Keywords: inventory/production: zero inventory; facilities/equipment: planning; inventory/production: parametric analysis (search for similar items in EconPapers)
Date: 1988
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