Computational Optimization of Manufacturing Batch Size and Shipment for an Integrated EPQ Model with Scrap

This paper employs mathematical modeling and algebraic approach to derive the optimal manufacturing batch size and number of shipment for a vendor-buyer integrated economic production quantity (EPQ) model with scrap. Unlike the conventional method by using differential calculus to determine replenishment lot size and optimal number of shipments for such an integrated system, this paper proposes a straightforward algebraic approach to replace the use of calculus on the total cost function for solving the optimal productionshipment policies. A simpler form for computing long-run average cost for such a vendor-buyer integrated EPQ problem is also provided.