EconPapers    
Economics at your fingertips  
 

Optimizing make-to-stock policies through a robust lot-sizing model

Agostinho Agra, Michael Poss and Micael Santos

International Journal of Production Economics, 2018, vol. 200, issue C, 302-310

Abstract: In this paper we consider a practical lot-sizing problem faced by an industrial company. The company plans the production for a set of products following a Make-To-Order policy. When the productive capacity is not fully used, the remaining capacity is devoted to the production of those products whose orders are typically quite below the established minimum production level. For these products the company follows a Make-To-Stock (MTS) policy since part of the production is to fulfill future estimated orders. This yields a particular lot-sizing problem aiming to decide which products should be produced and the corresponding batch sizes. These lot-sizing problems typically face uncertain demands, which we address here through the lens of robust optimization. First we provide a mixed integer formulation assuming the future demands are deterministic and we tighten the model with valid inequalities. Then, in order to account for uncertainty of the demands, we propose a robust approach where demands are assumed to belong to given intervals and the number of deviations to the nominal estimated value is limited. As the number of products can be large and some instances may not be solved to optimality, we propose two heuristics. Computational tests are conducted on a set of instances generated from real data provided by our industrial partner. The heuristics proposed are fast and provide good quality solutions for the tested instances. Moreover, since they are based on the mathematical model and use simple strategies to reduce the instances size, these heuristics could be extended to solve other multi-item lot-sizing problems where demands are uncertain.

Keywords: Lot-sizing; Make-To-Stock; Robust optimization; Mixed-integer linear programming (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527318301579
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:200:y:2018:i:c:p:302-310

Access Statistics for this article

International Journal of Production Economics is currently edited by R. W. Grubbström

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2018-06-23
Handle: RePEc:eee:proeco:v:200:y:2018:i:c:p:302-310