The literature reviewed on lot-sizing models with random yields is limited to certain random occurrences such as day to day administrative errors, minor machine repairs and random supply due to faulty delivery of parts. In reality however, the manufacturing industry faces other risks that are non random in nature. One example would be yield discrepancies caused by non random triggers such as a change in the production process, product or material. Yield uncertainties of these types are temporary in nature and usually pertain until the system stabilizes. One way of reducing the implications of such events is to have additional batches processed earlier in the production that can absorb the risk associated with the event. In this thesis, this particular approach is referred to as the <i>anticipatory batch insertion</i> to mitigate perceived risk. This thesis presents an exploratory study to analyze the performance of batch insertion under various scenarios. The scenarios are determined by sensitivity of products, schedule characteristics and magnitude of risks associated with causal triggers such as a process change. The results indicate that the highest return from batch insertion can be expected when there are slightly loose production schedules, high volumes of sensitive products are produced, there are high costs associated with the risks, and the risks can be predicted with some degree of certainty.

The literature reviewed on lot-sizing models with random yields is limited to certain random occurrences such as day to day administrative errors, minor machine repairs and random supply due to faulty delivery of parts. In reality however, the manufacturing industry faces other risks that are non random in nature. One example would be yield discrepancies caused by non random triggers such as a change in the production process, product or material. Yield uncertainties of these types are temporary in nature and usually pertain until the system stabilizes. One way of reducing the implications of such events is to have additional batches processed earlier in the production that can absorb the risk associated with the event. In this thesis, this particular approach is referred to as the <i>anticipatory batch insertion</i> to mitigate perceived risk. This thesis presents an exploratory study to analyze the performance of batch insertion under various scenarios. The scenarios are determined by sensitivity of products, schedule characteristics and magnitude of risks associated with causal triggers such as a process change. The results indicate that the highest return from batch insertion can be expected when there are slightly loose production schedules, high volumes of sensitive products are produced, there are high costs associated with the risks, and the risks can be predicted with some degree of certainty.