Manufacturing lot-sizing under MRP II environment: An improved analytical model and a heuristic procedure

Under single-level lot-sizing problem, well known Wagner–Whitin algorithm based on Dynamic Programming (DP) provides optimal order schedule. Order schedule does not work properly under Manufacturing Resource Planning (MRP II), where it is considered multi-level capacitated problem and requirements of subcomponents are dependent on the parent product. In this paper we formulate a multilevel capacitated optimization model and develop a relatively efficient heuristic working under MRP II environment which considers work center capacities and interrelationship between levels in lot-sizing computation.