IDEAS home Printed from https://ideas.repec.org/a/pal/jorsoc/v59y2008i1d10.1057_palgrave.jors.2602335.html
   My bibliography  Save this article

Raw material inventory solution in iron and steel industry using Lagrangian relaxation

Author

Listed:
  • L Tang

    (Northeastern University)

  • G Liu

    (Northeastern University)

  • J Liu

    (Loughborough University)

Abstract

Because raw material inventories can compensate for the unexpected demand fluctuations as well as variability in the replenishment process, large inventories are maintained to ensure the continuity of production. But storing them increases the inventory cost. Therefore, how to best balance raw material inventory and production demands under capacity constraints has become the serious subject faced by most large steel companies. This paper studies the raw material inventory problem abstracted from the production of Shanghai Baoshan Iron and Steel Complex (Baosteel) in a theoretical light, which provides the scientific foundation for practical applications. Safety stock and safety lead time are first introduced to absorb the random fluctuations. Then, a constrained optimization model is formulated to minimize the total cost attributed to raw material inventories. By using a synergistic combination of Lagrangian relaxation, ordinal introduction of constraints algorithm and heuristic algorithms, high-quality plans are obtained in a timely manner.

Suggested Citation

  • L Tang & G Liu & J Liu, 2008. "Raw material inventory solution in iron and steel industry using Lagrangian relaxation," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(1), pages 44-53, January.
    • Handle: RePEc:pal:jorsoc:v:59:y:2008:i:1:d:10.1057_palgrave.jors.2602335
    DOI: 10.1057/palgrave.jors.2602335
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/palgrave.jors.2602335
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/palgrave.jors.2602335?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Otavio Aleotti Maia, Luis & Yahya Qassim, Raad, 1999. "Minimum cost safety stocks for frequent delivery manufacturing," International Journal of Production Economics, Elsevier, vol. 62(3), pages 233-236, September.
    2. Hoshino, Kyoji, 1996. "Criterion for choosing ordering policies between fixed-size and fixed-interval, pull-type and push-type," International Journal of Production Economics, Elsevier, vol. 44(1-2), pages 91-95, June.
    3. Harvey M. Wagner & Thomson M. Whitin, 1958. "Dynamic Version of the Economic Lot Size Model," Management Science, INFORMS, vol. 5(1), pages 89-96, October.
    4. Matheus, Peter & Gelders, Ludo, 2000. "The (R, Q) inventory policy subject to a compound Poisson demand pattern," International Journal of Production Economics, Elsevier, vol. 68(3), pages 307-317, December.
    5. Chiang, Chi & Gutierrez, Genaro J., 1996. "A periodic review inventory system with two supply modes," European Journal of Operational Research, Elsevier, vol. 94(3), pages 527-547, November.
    6. Alan S. Manne, 1958. "Programming of Economic Lot Sizes," Management Science, INFORMS, vol. 4(2), pages 115-135, January.
    7. Relph, Geoff & Barrar, Peter, 2003. "Overage inventory--how does it occur and why is it important?," International Journal of Production Economics, Elsevier, vol. 81(1), pages 163-171, January.
    8. Moustapha Diaby & Harish C. Bahl & Mark H. Karwan & Stanley Zionts, 1992. "A Lagrangean Relaxation Approach for Very-Large-Scale Capacitated Lot-Sizing," Management Science, INFORMS, vol. 38(9), pages 1329-1340, September.
    9. Edward H. Bowman, 1956. "Production Scheduling by the Transportation Method of Linear Programming," Operations Research, INFORMS, vol. 4(1), pages 100-103, February.
    10. Ganeshan, Ram, 1999. "Managing supply chain inventories: A multiple retailer, one warehouse, multiple supplier model," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 341-354, March.
    11. Ishii, Kazuyoshi & Imori, Shigeki, 1996. "A production ordering system for two-item, two-stage, capacity-constraint production and inventory model," International Journal of Production Economics, Elsevier, vol. 44(1-2), pages 119-128, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kosuke Kawakami & Hirokazu Kobayashi & Kazuhide Nakata, 2021. "Seasonal Inventory Management Model for Raw Materials in Steel Industry," Interfaces, INFORMS, vol. 51(4), pages 312-324, July.
    2. Barros, Júlio & Cortez, Paulo & Carvalho, M. Sameiro, 2021. "A systematic literature review about dimensioning safety stock under uncertainties and risks in the procurement process," Operations Research Perspectives, Elsevier, vol. 8(C).
    3. Toni Greif & Nikolai Stein & Christoph M. Flath, 2023. "Information Value Analysis for Real-Time Silo Fill-Level Monitoring," Interfaces, INFORMS, vol. 53(4), pages 283-294, July.
    4. R J Ormerod, 2010. "OR as rational choice: a decision and game theory perspective," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(12), pages 1761-1776, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jans, R.F. & Degraeve, Z., 2005. "Modeling Industrial Lot Sizing Problems: A Review," ERIM Report Series Research in Management ERS-2005-049-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    2. Harvey M. Wagner, 2002. "And Then There Were None," Operations Research, INFORMS, vol. 50(1), pages 217-226, February.
    3. Jans, Raf & Degraeve, Zeger, 2007. "Meta-heuristics for dynamic lot sizing: A review and comparison of solution approaches," European Journal of Operational Research, Elsevier, vol. 177(3), pages 1855-1875, March.
    4. Brahimi, Nadjib & Dauzere-Peres, Stephane & Najid, Najib M. & Nordli, Atle, 2006. "Single item lot sizing problems," European Journal of Operational Research, Elsevier, vol. 168(1), pages 1-16, January.
    5. Absi, Nabil & Kedad-Sidhoum, Safia, 2008. "The multi-item capacitated lot-sizing problem with setup times and shortage costs," European Journal of Operational Research, Elsevier, vol. 185(3), pages 1351-1374, March.
    6. Toy, Ayhan Özgür & Berk, Emre, 2013. "Dynamic lot sizing for a warm/cold process: Heuristics and insights," International Journal of Production Economics, Elsevier, vol. 145(1), pages 53-66.
    7. Melega, Gislaine Mara & de Araujo, Silvio Alexandre & Jans, Raf, 2018. "Classification and literature review of integrated lot-sizing and cutting stock problems," European Journal of Operational Research, Elsevier, vol. 271(1), pages 1-19.
    8. Degraeve, Z. & Jans, R.F., 2003. "Improved Lower Bounds For The Capacitated Lot Sizing Problem With Set Up Times," ERIM Report Series Research in Management ERS-2003-026-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    9. Elena Katok & Holly S. Lewis & Terry P. Harrison, 1998. "Lot Sizing in General Assembly Systems with Setup Costs, Setup Times, and Multiple Constrained Resources," Management Science, INFORMS, vol. 44(6), pages 859-877, June.
    10. Drexl, A. & Kimms, A., 1997. "Lot sizing and scheduling -- Survey and extensions," European Journal of Operational Research, Elsevier, vol. 99(2), pages 221-235, June.
    11. Haugen, Kjetil K. & Olstad, Asmund & Pettersen, Bard I., 2007. "The profit maximizing capacitated lot-size (PCLSP) problem," European Journal of Operational Research, Elsevier, vol. 176(1), pages 165-176, January.
    12. Nadjib Brahimi & Stéphane Dauzère-Pérès & Najib M. Najid, 2006. "Capacitated Multi-Item Lot-Sizing Problems with Time Windows," Operations Research, INFORMS, vol. 54(5), pages 951-967, October.
    13. Svoboda, Josef & Minner, Stefan & Yao, Man, 2021. "Typology and literature review on multiple supplier inventory control models," European Journal of Operational Research, Elsevier, vol. 293(1), pages 1-23.
    14. Yiyong Xiao & Meng You & Xiaorong Zuo & Shenghan Zhou & Xing Pan, 2018. "The Uncapacitatied Dynamic Single-Level Lot-Sizing Problem under a Time-Varying Environment and an Exact Solution Approach," Sustainability, MDPI, vol. 10(11), pages 1-14, October.
    15. Hax, Arnoldo C. & Meal, Harlan C., 1973. "Hierarchical integration of production planning and scheduling," Working papers 656-73., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    16. Beraudy, Sébastien & Absi, Nabil & Dauzère-Pérès, Stéphane, 2022. "Timed route approaches for large multi-product multi-step capacitated production planning problems," European Journal of Operational Research, Elsevier, vol. 300(2), pages 602-614.
    17. Shi Li, 2020. "Constant Approximation Algorithm for Nonuniform Capacitated Multi-Item Lot Sizing via Strong Covering Inequalities," Mathematics of Operations Research, INFORMS, vol. 45(3), pages 947-965, August.
    18. Persona, Alessandro & Battini, Daria & Manzini, Riccardo & Pareschi, Arrigo, 2007. "Optimal safety stock levels of subassemblies and manufacturing components," International Journal of Production Economics, Elsevier, vol. 110(1-2), pages 147-159, October.
    19. Okhrin, Irena & Richter, Knut, 2011. "The linear dynamic lot size problem with minimum order quantity," International Journal of Production Economics, Elsevier, vol. 133(2), pages 688-693, October.
    20. Kerem Akartunalı & Ioannis Fragkos & Andrew J. Miller & Tao Wu, 2016. "Local Cuts and Two-Period Convex Hull Closures for Big-Bucket Lot-Sizing Problems," INFORMS Journal on Computing, INFORMS, vol. 28(4), pages 766-780, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jorsoc:v:59:y:2008:i:1:d:10.1057_palgrave.jors.2602335. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.