MRP lot sizing with variable production/purchasing costs: formulation and solution |
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| Authors: | ERIC L PRENTIS BASHEER M KHUMAWALA |
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| Affiliation: | 1. Department of Decision Systems , University of Southern California School of Business Administration , Los Angeles, CA, 90089, USA;2. Department of Decision and Information Sciences , University of Houston—University Park College of Business Administration , Houston, TX, 77004, USA |
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| 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&B7) 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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