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Optimal and predefined policies for the static lot sizing problem in a two stage recovery system


  • Tobias Schulz

    () (Institute of Economic Theory and Statistics (ETS), Karlsruhe Institute of Technology)


Analyzing static lot sizing problems has always attracted a considerable interest in scientific literature. A commonly applied methodology to solve the trade-off between setup and holding costs is to order the Economic Order Quantity (EOQ) whenever the corresponding inventory is depleted. Yet, this simple proceeding can only be applied as long as there is only a single source of supply. Recovery systems, however, obtain in general two sources of supply, remanufacturing product returns and fabricating new products. Therefore, a more sophisticated approach needs to be taken into account for this kind of problem setting. This contribution focusses on extending the current knowledge in this field of research by showing that non-equal remanufacturing batches propose a significant cost reduction for some parameter classes. Furthermore, a more general optimization approach is introduced that allows to evaluate the solution quality of the preset policy structures.

Suggested Citation

  • Tobias Schulz, 2011. "Optimal and predefined policies for the static lot sizing problem in a two stage recovery system," FEMM Working Papers 110007, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  • Handle: RePEc:mag:wpaper:110007

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    References listed on IDEAS

    1. Engelmann, Bernd & Hayden, Evelyn & Tasche, Dirk, 2003. "Measuring the Discriminative Power of Rating Systems," Discussion Paper Series 2: Banking and Financial Studies 2003,01, Deutsche Bundesbank, Research Centre.
    2. Greg M. Gupton, 2005. "Advancing Loss Given Default Prediction Models: How the Quiet Have Quickened," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 34(2), pages 185-230, July.
    3. Robert A. Jarrow & David Lando & Stuart M. Turnbull, 2008. "A Markov Model for the Term Structure of Credit Risk Spreads," World Scientific Book Chapters,in: Financial Derivatives Pricing Selected Works of Robert Jarrow, chapter 18, pages 411-453 World Scientific Publishing Co. Pte. Ltd..
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