Paper Info
Title
Efficient and effective heuristics for the coordinated capacitated lot-size problem
Abstract
Coordinating procurement decisions for a family of products that share a constrained resource, such as an ocean shipping container, is an important managerial problem. However due to the problem’s difficult mathematical properties, efficient and effective solution procedures for the problem have eluded researchers. This paper proposes two heuristics, for the capacitated, coordinated dynamic demand lot-size problem with deterministic but time-varying demand. In addition to inventory holding costs, the problem assumes a joint setup cost each time any member of the product family is replenished and an individual item setup cost for each item type replenished. The objective is to meet all customer demand without backorders at minimum total cost. We propose a six-phase heuristic (SPH) and a simulated annealing meta-heuristic (SAM). The SPH begins by assuming that each customer demand is met by a unique replenishment and then it seeks to iteratively maximize the net savings associated with order consolidation. Using SPH to find a starting solution, the SAM orchestrates escaping local solutions and exploring other areas of the solution state space that are randomly generated in an annealing search process. The results of extensive computational experiments document the effectiveness and efficiency of the heuristics. Over a wide range of problem parameter values, the SPH and SAM find solutions with an average optimality gap of 1.53% and 0.47% in an average time of 0.023CPUseconds and 0.32CPUseconds, respectively. The heuristics are strong candidates for application as stand alone solvers or as an upper bounding procedure within an optimization based algorithm. The procedures are currently being tested as a solver in the procurement software suite of a nationally recognized procurement software provider.
Year
DOI
Venue
2010
10.1016/j.ejor.2009.08.015
European Journal of Operational Research
Keywords
Field
DocType
Joint replenishment,Coordinated replenishment,Lot sizing,Heuristics
Simulated annealing,Mathematical optimization,Heuristic,Holding cost,Operations research,Inventory control,Heuristics,Dynamic demand,Solver,Procurement,Operations management,Mathematics
Journal
Volume
Issue
ISSN
203
3
0377-2217
Citations 
PageRank 
References 
7
0.59
9
Authors
2
Name
Order
Citations
PageRank
Arunachalam Narayanan171.60
E. Powell Robinson21338.70