Note—Can a Reduction in Set Up Costs Indeed Increase Total Costs?
Management Science · 1988 · Volume 34 · Issue 10
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
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