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Computing non-stationary (s, S) policies using mixed integer linear programming

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  • Xiang, Mengyuan
  • Rossi, Roberto
  • Martin-Barragan, Belen
  • Tarim, S. Armagan

Abstract

This paper addresses the single-item single-stocking location non-stationary stochastic lot sizing problem under the (s, S) control policy. We first present a mixed integer non-linear programming (MINLP) formulation for determining near-optimal (s, S) policy parameters. To tackle larger instances, we then combine the previously introduced MINLP model and a binary search approach. These models can be reformulated as mixed integer linear programming (MILP) models which can be easily implemented and solved by using off-the-shelf optimization software. Computational experiments demonstrate that optimality gaps of these models are less than 0.3% of the optimal policy cost and computational times are reasonable.

Suggested Citation

  • Xiang, Mengyuan & Rossi, Roberto & Martin-Barragan, Belen & Tarim, S. Armagan, 2018. "Computing non-stationary (s, S) policies using mixed integer linear programming," European Journal of Operational Research, Elsevier, vol. 271(2), pages 490-500.
    • Handle: RePEc:eee:ejores:v:271:y:2018:i:2:p:490-500
    DOI: 10.1016/j.ejor.2018.05.030
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    Cited by:

    1. Rossi, Roberto & Chen, Zhen & Tarim, S. Armagan, 2024. "On the stochastic inventory problem under order capacity constraints," European Journal of Operational Research, Elsevier, vol. 312(2), pages 541-555.
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    3. Visentin, Andrea & Prestwich, Steven & Rossi, Roberto & Tarim, S. Armagan, 2021. "Computing optimal (R,s,S) policy parameters by a hybrid of branch-and-bound and stochastic dynamic programming," European Journal of Operational Research, Elsevier, vol. 294(1), pages 91-99.
    4. Chen, Zhen & Rossi, Roberto, 2021. "A dynamic ordering policy for a stochastic inventory problem with cash constraints," Omega, Elsevier, vol. 102(C).

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