Extensions of the Planning Horizon Theorem in the Dynamic Lot Size Model

Gary D. Eppen, F. J. Gould and B. Peter Pashigian
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Gary D. Eppen: The University of Chicago
F. J. Gould: The University of Chicago
B. Peter Pashigian: The University of Chicago

Management Science, 1969, vol. 15, issue 5, 268-277

Abstract: This paper considers an N period production planning problem in which a sequence of known demands d 1 , d 2 ,..., d N must be satisfied. The cost of production in period t consists of a setup cost K t plus a marginal cost per unit c t . The cost of carrying a unit of inventory into period t is h t - 1 . An optimal policy is a production plan that satisfies demand at minimum cost. The main results of the paper are a theorem that decreases the computational effort required to find optimal policies and a theorem that establishes the existence of planning horizons. The results of these two theorems are combined in a forward algorithm for the efficient solution of the problem.

Date: 1969
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:15:y:1969:i:5:p:268-277

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