Optimum Lot Sizes for Parts Used in Aircraft Production

Abstract

In the treatment of most inventory problems, obsolescence is either ignored or a constant factor is included in the inventorycarrying cost to account for obsolescence. However, the high obsolescence rate of detailed parts in the aircraft industry necessitates a more precise consideration of obsolescence. A method is developed for evaluating and including obsolescence costs in an inventory model. Other important and unusual factors in this inventory situation are (a) a demand rate that increases irregularly until the maximum rate is reached and (b) splitting of lots in the shop.