A Multiple Lot-Sizing Decision for Two-Stage Systems with Interrupted Geometric Yield and Non-Rigid Demand

Hsi Mei Hsu*, Tai Sheng Su, Muh-Cherng Wu, Liang Chuan Huang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

In this paper, we investigate a multiple-lot-sizing-production-to-order problem for a two-stage system with interrupted geometric yield and non-rigid demand. Given a due date for an order, we simultaneously determine the optimal lot sizes for the two production stages in each period. This problem is formulated as a dynamic program (DP), and four lemmas are proposed to confine its solution space. Solving the DP for large-scale cases is computationally extensive. We propose a heuristic solution method for the DP in order to obtain a satisfactory solution efficiently. Numerical tests indicate that the heuristic method yields results with satisfactory accuracy in cases with large initial demand. However, while in cases with low initial demand, we would suggest the use of DP method to solve the problem because its required computational efforts are acceptable in practice and the results obtained from the heuristic method become far less accurate.

Original languageEnglish
Pages (from-to)229-244
Number of pages16
JournalJournal of the Chinese Institute of Industrial Engineers
Volume26
Issue number4
DOIs
StatePublished - 1 Jan 2009

Keywords

  • Dynamic programming
  • Interrupted geometric distribution
  • Lot-sizing
  • Production/inventory system
  • Two-stage system

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