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Competition under capacitated dynamic lot-sizing with capacity acquisition

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  • Li, Hongyan
  • Meissner, Joern

Abstract

Lot-sizing and capacity planning are important supply chain decisions, and competition and cooperation affect the performance of these decisions. In this paper, we look into the dynamic lot-sizing and resource competition problem of an industry consisting of multiple firms. A capacity competition model combining the complexity of time-varying demand with cost functions and economies of scale arising from dynamic lot-sizing costs is developed. Each firm can replenish inventory at the beginning of each period in a finite planning horizon. Fixed as well as variable production costs incur for each production setup, along with inventory carrying costs. The individual production lots of each firm are limited by a constant capacity restriction, which is purchased up front for the planning horizon. The capacity can be purchased from a spot market, and the capacity acquisition cost fluctuates with the total capacity demand of all the competing firms. We solve the competition model and establish the existence of a capacity equilibrium over the firms and the associated optimal dynamic lot-sizing plan for each firm under mild conditions.

Suggested Citation

  • Li, Hongyan & Meissner, Joern, 2011. "Competition under capacitated dynamic lot-sizing with capacity acquisition," International Journal of Production Economics, Elsevier, vol. 131(2), pages 535-544, June.
  • Handle: RePEc:eee:proeco:v:131:y:2011:i:2:p:535-544
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    Cited by:

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    2. Suliman, Saad M.A. & Jawad, Sayed Husain, 2012. "Optimization of preventive maintenance schedule and production lot size," International Journal of Production Economics, Elsevier, vol. 137(1), pages 19-28.
    3. Hongyan Li & Joern Meissner, 2018. "Capacity optimization and competition with cyclical and lead-time-dependent demands," Annals of Operations Research, Springer, vol. 271(2), pages 737-763, December.
    4. Luis A. Guardiola & Ana Meca & Justo Puerto, 2021. "Unitary Owen Points in Cooperative Lot-Sizing Models with Backlogging," Mathematics, MDPI, vol. 9(8), pages 1-19, April.
    5. Carvalho, Margarida & Pedroso, João Pedro & Telha, Claudio & Van Vyve, Mathieu, 2018. "Competitive uncapacitated lot-sizing game," International Journal of Production Economics, Elsevier, vol. 204(C), pages 148-159.
    6. Ou, Jinwen & Feng, Jiejian, 2019. "Production lot-sizing with dynamic capacity adjustment," European Journal of Operational Research, Elsevier, vol. 272(1), pages 261-269.
    7. Rapine, Christophe & Penz, Bernard & Gicquel, Céline & Akbalik, Ayse, 2018. "Capacity acquisition for the single-item lot sizing problem under energy constraints," Omega, Elsevier, vol. 81(C), pages 112-122.

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    More about this item

    Keywords

    Game theory Capacity optimization Competition Lot-sizing Approximation Equilibrium;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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