Multiple lot-sizing decisions in a two-stage production with an interrupted geometric yield and non-rigid demand

Muh-Cherng Wu*, L. C. Huang, H. M. Hsu, T. S. Su

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

7 Scopus citations

Abstract

In a production system with random yield, it may be more cost effective to release lots multiple times towards fulfilling a customer order. Such a decision, called the multiple lot-sizing problem, has been investigated in various contexts. This paper proposes an efficient algorithm for solving a new multiple lot-sizing problem defined in the context of a two-stage production system with non-rigid demand when its process yields are governed by interrupted geometric distributions. We formulate this problem as a dynamic program (DP) and develop lemmas to solve it. However, solving such a DP may be computationally extensive, particularly for large-scale cases with a high yield. Therefore, this study proposes an efficient algorithm for resolving computational issues. This algorithm is designed to reduce the DP network into a much simpler algorithm by combining a group of DP branches into a single one. Extensive experiments were carried out. Results indicate that the proposed reduction algorithm is quite helpful for practitioners dealing with large-scale cases characterized by high-yield.

Original languageEnglish
Pages (from-to)1075-1084
Number of pages10
JournalJournal of the Operational Research Society
Volume62
Issue number6
DOIs
StatePublished - 1 Jun 2011

Keywords

  • dynamic programming
  • interrupted geometric distribution
  • Lot-sizing
  • production/inventory system
  • two-stage system

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