On heuristics and their performance evaluation for dynamic lot sizing

The worst case performance ratios (WCPRs) of several heuristics that may be used as surrogates for the optimal dynamical lot sizing model of Wagner and Whitin were analyzed by several researchers. The paper proposes one equally reasonable heuristic and presents a simpler proof of the WCPR of the least unit cost heuristic. Since the WCPR is not only overly pessimistic but may also be meaningless, proposes in its place the concept of anticipated performance ratio that is based on the expected characteristics of the parameters of the problem over the planning horizon, and illustrates its application in the case of bounded demand.