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Multilevel Lot-Sizing with Inventory Bounds

Author

Listed:
  • Hark-Chin Hwang

    (School of Management, Kyung Hee University, Seoul 130-701, Republic of Korea)

  • Wilco van den Heuvel

    (Econometric Institute, Erasmus University Rotterdam, 3062 Rotterdam, Netherlands)

  • Albert P. M. Wagelmans

    (Econometric Institute, Erasmus University Rotterdam, 3062 Rotterdam, Netherlands)

Abstract

We consider a single-item multilevel lot-sizing problem with a serial structure where one of the levels has an inventory capacity (the bottleneck level). We propose a novel dynamic programming algorithm combining Zangwill’s approach for the uncapacitated problem and the basis-path approach for the production capacitated problem. Under reasonable assumptions on the cost parameters the time complexity of the algorithm is O ( L T 6 ) with L the number of levels in the supply chain and T the length of the planning horizon. Computational tests show that our algorithm is significantly faster than the commercial solver C plex applied to a standard formulation and can solve reasonably sized instances up to 48 periods and 12 levels in a few minutes.

Suggested Citation

  • Hark-Chin Hwang & Wilco van den Heuvel & Albert P. M. Wagelmans, 2023. "Multilevel Lot-Sizing with Inventory Bounds," INFORMS Journal on Computing, INFORMS, vol. 35(6), pages 1470-1490, November.
    • Handle: RePEc:inm:orijoc:v:35:y:2023:i:6:p:1470-1490
    DOI: 10.1287/ijoc.2022.0216
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    References listed on IDEAS

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