A network flow model for the capacitated lot-sizing problem

The lot-sizing problem considered in this paper consists in planning the production of multiple items on a single machine over a finite planning horizon divided into time periods. The objective of the problem is to determine a minimum cost production plan that meets the forecast demand for the items. The mathematical model considers setup time and setup cost, and is represented as a minimum cost network flow problem. A branch-and-bound method is proposed for solving the model. The performance of the method is evaluated by using numerical experiments for various demand patterns and values of cost parameters.