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Dynamic lot sizing problem with continuous-time Markovian production cost
University College Dublin.
Linköping University, Department of Management and Engineering, Production Economics . Linköping University, The Institute of Technology.
University of Tehran.
2009 (English)In: International Journal of Production Economics, ISSN 0925-5273, Vol. 120, no 2, 607-612 p.Article in journal (Refereed) Published
Abstract [en]

This paper develops a polynomial algorithm for obtaining dynamic economic lot sizes in a single product multiperiod production system with the objective of minimizing total production and inventory costs over T periods. It is assumed that production costs are linear, inventory costs are concave, setup costs are zero and backlogging is not permitted in all periods. Moreover, the unit production cost is a stochastic variable, which is evolved according to a continuous-time Markov process over the planning horizon. The model is formulated as a stochastic dynamic programming (DP) optimization with the state variable being unit production cost. Then, it is solved using the backward dynamic programming approach. To justify the application of the proposed model, two practical cases are presented.

Place, publisher, year, edition, pages
2009. Vol. 120, no 2, 607-612 p.
Keyword [en]
Dynamic lot sizing; Dynamic programming; Stochastic processes
National Category
Social Sciences
URN: urn:nbn:se:liu:diva-21266DOI: 10.1016/j.ijpe.2009.04.007OAI: diva2:241043
Available from: 2009-09-30 Created: 2009-09-30 Last updated: 2009-09-30

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ReferencesLink to record
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