MRP lot sizing with variable production/purchasing costs: Formulation and solution

MRP lot sizing with variable production/purchasing costs: Formulation and solution

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Article ID: iaor1988988
Country: United Kingdom
Volume: 27
Issue: 6
Start Page Number: 965
End Page Number: 984
Publication Date: Jun 1989
Journal: International Journal of Production Research
Authors: ,
Keywords: materials
Abstract:

The research on lot sizing is extensive; however, no author in the literature reviewed to date provides an optimal solution algorithm to a prevalent problem which is found in manufacturing. A multi-level, general product-structure, variable-cost model is presented which follows the procedure of a closed-loop material requirements planning (MRP) system, and incorporates many conditions that production and material managers find in practice. A branch and bound (B&B) algorithm is developed. The efficiency of B&B is derived from effective lower bounds and solution procedures which are determined on the basis of the space-time structure of the MRP lot-sizing problem and its non-convex total-cost function. This path-dependent lower bound is computationally efficient and guarantees an optimal solution. The B&B algorithm is tested on problems and compared to heuristics in the literature.

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