The Multi-Item Setup-Reduction Investment-Allocation Problem with Continuous Investment-Cost Functions

John P. Leschke and Elliott N. Weiss
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John P. Leschke: The McIntire School of Commerce, University of Virginia, Charlottesville, Virginia 22903-2493
Elliott N. Weiss: The Darden School, University of Virginia, Charlottesville, Virginia 22903-2493

Management Science, 1997, vol. 43, issue 6, 890-894

Abstract: In this note, we analyze investment priorities for setup-reduction programs in a multi-product system. We provide an objective function transformation for the model developed by Porteus (Porteus, E. L. 1985. Investing in reduced setups in the EOQ model. Management Sci. 31(8, August) 998--1010.) that permits the use of marginal analysis in both the single- and multiple-item problems. For the multiple-item problem, we show that managers should not reduce the setup for each product to its optimum in sequential order. This is in contrast to recommendations found in the existing literature.

Keywords: inventory management; setup reduction; economic order quantity models (search for similar items in EconPapers)
Date: 1997
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