Simulation optimization for the stochastic economic lot scheduling problem with sequence-dependent setup times

Nils Löhndorf, Manuel Riel and Stefan Minner

International Journal of Production Economics, 2014, vol. 157, issue C, 170-176

Abstract: We consider the stochastic economic lot scheduling problem (SELSP) with lost sales and random demand where switching between products is subject to sequence-dependent setup times. We propose a solution based on simulation optimization using an iterative two-step procedure which combines global policy search with local search heuristics for the traveling salesman sequencing subproblem. To optimize the production cycle, we compare two criteria: minimizing total setup times and evenly distributing setups to obtain a more regular production cycle. Based on a numerical study, we find that a policy with a balanced production cycle leads to lower cost than other policies with unbalanced cycles.

Keywords: Inventory; Multi-product; Lot-sizing and scheduling; Stochastic demand; Sequence-dependent setups; Simulation optimization (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:157:y:2014:i:c:p:170-176

DOI: 10.1016/j.ijpe.2014.05.006

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