A parametric analysis of the dynamic lot-sizing problem

This paper gives an analysis of the parameterized dynamic lot-size model. Three cases of parameterization are studied here: (i) setup and holding costs, (ii) demand vector, (iii) costs and demand. For all these cases the stability region of the parameters is found, i.e. it is shown for which parameters a solution generated by Wagner-Whitin’s algorithm remains valid. In the parametric analysis of the cases (i) and (ii) the parameter intervals are found by studying a simple system of inequalities. In the more complicated case (iii) the stability region of the two parameters is drawn by a computer program.