Cost considerations in serial production lines

A major consideration in production management is to understand the cost impact of various designs. The development of integrated models is necessary for the evaluation of business scenarios. These models can be used to make the problem of investment in manufacturing technology more transparent to decision makers. The assumptions a firm employs regarding the allocation of direct costs can be explored prior to the development of new policies. In this work we use two approaches in developing production cost-profit functions. The first approach minimizes the costs incurred in production while the second approach is concerned with the maximization of profit arising from production. We investigate the impact of throughput and work-in-process inventory (WIP) on cost objective functions by altering a few design choices. These are the number of stations and the total number of buffer slots that must be allocated between workstations. Insights of the behavior of these functions due to the input parameters are discussed.