Energy-aware Economic Production Quantity model with variable energy pricing

In this paper, an energy-aware Economic Production Quantity (EPQ) model is presented to determine optimum production run length and batch size with respect to variable energy cost. Here, variable unit production cost includes energy consumption charge which is a function of production time and time-of-use, and alternates between two prices during peak and off-peak hours. This paper addresses the above integration in order to minimize the overall cost of the system. In the first phase of this study, a new scenario-based framework is proposed to find the optimal value of production time. In the second phase, a general mixed integer nonlinear programming (MINLP) model is developed for the given framework. The energy cost defined by the framework and mathematical model depends on the number of peak periods during the production period and is calculated using floor functions. The MINLP is solved numerically and analytically, and a closed form solution is obtained for the production run length. The model is analyzed for different scenarios and the results are discussed.