Approximations for non-stationary stochastic lot-sizing under (s,Q)-type policy

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Abstract / Description of output

This paper addresses the single-item single-stocking location non-stationary stochastic lot-sizing problem under a reorder point – order quantity control strategy. The reorder points and order quantities are chosen at the beginning of the planning horizon. The re-order points are allowed to vary with time and we consider order quantities either to bea series of time-dependent constants or a fixed value; this leads to two variants of the policy: the (s t , Q t ) and the (s t , Q) policies, respectively. For both policies, we present stochastic dynamic programs (SDP) to determine optimal policy parameters and introduce mixed integer non-linear programming (MINLP) heuristics that leverage piece wise-linear approximations of the cost function. Numerical experiments demonstrate that our solution method efficiently computes near-optimal parameters for a broad class of problem instances.
Original languageEnglish
Pages (from-to)573-584
Number of pages12
JournalEuropean Journal of Operational Research
Volume298
Issue number2
Early online date11 Jun 2021
DOIs
Publication statusPublished - 16 Apr 2022

Keywords / Materials (for Non-textual outputs)

  • Inventory
  • (,s,Q,) policy
  • stochastic lot-sizing
  • non-stationary demand

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  • Stochastic inventory control: A literature review

    Ma, X., Rossi, R. & Archibald, T., 25 Dec 2019, (E-pub ahead of print) Proceedings of the 9th IFAC INFORMS Conference: Manufacturing Modelling, Management and Control - MIM 2019. p. 1490-1495 (IFAC-PapersOnLine; vol. 52, no. 13).

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