A Cost Adjustment Heuristic for Dynamic Lot-Sizing with Uncertain Demand Timing

Christopher H. Nevison
Additional contact information
Christopher H. Nevison: Colgate University, Hamilton, New York

Operations Research, 1985, vol. 33, issue 6, 1342-1352

Abstract: We define a new heuristic, based on the adjustment of set-up costs, for the dynamic lot-sizing problem when demand timing is uncertain. Using a range of simulated problems, we compare the performance of this cost adjustment heuristic with that of a safety lead time heuristic, Zangwill's deterministic algorithm, which ignores uncertainty, and the optimal solution. Results show that the safety lead time heuristic works well for problems with high shortage costs and high probability of early demands, but poorly in other circumstances. The cost adjustment heuristic is quite robust, generally exceeds the performance of the safety lead time approach, and is relatively insensitive to variations in uncertainty.

Keywords: 357 a heuristic policy for dynamic lot-sizing with uncertainty; 362 heuristics for dynamic lot-sizing (search for similar items in EconPapers)
Date: 1985
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/opre.33.6.1342 (application/pdf)

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:inm:oropre:v:33:y:1985:i:6:p:1342-1352

Access Statistics for this article

More articles in Operations Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().