An efficient algorithm for the dynamic economic lot size problem

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Abstract

This paper addresses the question of production/procurement planning for finite horizon, deterministic, dynamic demand process, known as the “Dynamic Economic Lot size Problem”. A new algorithm is presented and compared to existing exact procedures. The algorithm first decomposes the problem into much smaller sequences (planning horizons). It then applies an exact method to schedule the production in each sequence (this stage is illustrated here with the “classical” dynamic programming algorithm of Zangwill [8]). Finally, it combines the partial solutions to an overall optimal solution. Camputational results which demonstrate the effectiveness of the proposed algorithm are provided.

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    Citation Excerpt :

    They also characterized an optimal planning structure partially, and developed an algorithm with computational time of O(N log N). The case in which backlog is not permitted and no discount is available is considered by Golany et al. [8]. They developed an algorithm which first decomposes the problem into much smaller planning horizons.

This research was partially supported by the Technion V.P.R. Fund-Y. Apter Research Fund.

Boaz Golany is an assistant professor in the Industrial Engineering and Management department at The Technion-Israel Institute of Technology. His research areas are mainly in applications of Operations Research to Industrial Engineering, in particular, in efficiency evaluation, plant layout and production management. He holds a Ph.D. from the University of Texas in Austin and a B.Sc. from The Technion.

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Rafi Maman is a researcher in the Koninklijke/Shell Laboratorium Amsterdam (Shell Research B.V.) in the department of Mathematics and System Engineering. He received his B.Sc. in Industrial Engineering and Management from the Technion in 1989.

Micha Yadin was the Gruenblat professor of Production Engineering in the faculty of Industrial Engineering and Management at The Technion. He received his B.Sc. (Mechanical Eng.), M.Sc. (Industrial Eng.) and Ph.D. (Operations Research) from The Technion. His research areas included Stochastic Modeling and Production and Operations Management. He was the Dean of the I.E. faculty and the President of the Israeli O.R. Society. Professor Yadin passed away in May 1991.

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