THE ECONOMIC CONSEQUENCES OF DEVIATIONS FROM ECONOMIC LOT SIZES.

The basic model for determining optimal lot sizes in production-inventory systems is: K = SB+F B/Z +Z/2 Sl, (the lot size = Z). If interactions between two or more products of the system cause restrictions to be laid upon the lot sizes, the technique of Lagrangian multipliers may be used for solving the lot size problem. A successful practical application of the Lagrange-technique depends largely upon the availability of electronic data-processing equipment.
In business situations, deviations from optimal lot sizes are often required for reasons not included in the model. As shown in the second part of this paper, the economic consequences of the deviations can be determined approximately without any great calculation. It is also indicated that the economic consequences caused by moderate deviations are rather small compared with the total costs involved in the whole production inventory system. [ABSTRACT FROM AUTHOR]