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Capacitated Dynamic Lot Sizing with Capacity Acquisition

Research output: Working paper

Published

Standard

Capacitated Dynamic Lot Sizing with Capacity Acquisition. / Li, H; Meissner, J.
Lancaster University: The Department of Management Science, 2009. (Management Science Working Paper Series).

Research output: Working paper

Harvard

Li, H & Meissner, J 2009 'Capacitated Dynamic Lot Sizing with Capacity Acquisition' Management Science Working Paper Series, The Department of Management Science, Lancaster University.

APA

Li, H., & Meissner, J. (2009). Capacitated Dynamic Lot Sizing with Capacity Acquisition. (Management Science Working Paper Series). The Department of Management Science.

Vancouver

Li H, Meissner J. Capacitated Dynamic Lot Sizing with Capacity Acquisition. Lancaster University: The Department of Management Science. 2009. (Management Science Working Paper Series).

Author

Li, H ; Meissner, J. / Capacitated Dynamic Lot Sizing with Capacity Acquisition. Lancaster University : The Department of Management Science, 2009. (Management Science Working Paper Series).

Bibtex

@techreport{ab1f8acafabc410fa1610ea5f3160cd3,
title = "Capacitated Dynamic Lot Sizing with Capacity Acquisition",
abstract = "One of the fundamental problems in operations management is to determine the optimal investment in capacity. Capacity investment consumes resources and the decision is often irreversible. Moreover, the available capacity level affects the action space for production and inventory planning decisions directly. In this paper, we address the joint capacitated lot sizing and capacity acquisition problem. The firm can produce goods in each of the finite periods into which the production season is partitioned. Fixed as well as variable production costs are incurred for each production batch, along with inventory carrying costs. The production per period is limited by a capacity restriction. The underlying capacity must be purchased up front for the upcoming season and remains constant over the entire season. We assume that the capacity acquisition cost is smooth and convex. For this situation, we develop a model, which combines the complexity of time-varying demand and cost functions and that of scale economies arising from dynamic lot-sizing costs with the purchase cost of capacity. We propose a heuristic algorithm that runs in polynomial time to determine a good capacity level and corresponding lot sizing plan simultaneously. Numerical experiments show that our method is a good trade-off between solution quality and running time.",
keywords = "Supply chain management, Lot sizing, Capacity, Approximation, Heuristics",
author = "H Li and J Meissner",
year = "2009",
language = "English",
series = "Management Science Working Paper Series",
publisher = "The Department of Management Science",
type = "WorkingPaper",
institution = "The Department of Management Science",

}

RIS

TY - UNPB

T1 - Capacitated Dynamic Lot Sizing with Capacity Acquisition

AU - Li, H

AU - Meissner, J

PY - 2009

Y1 - 2009

N2 - One of the fundamental problems in operations management is to determine the optimal investment in capacity. Capacity investment consumes resources and the decision is often irreversible. Moreover, the available capacity level affects the action space for production and inventory planning decisions directly. In this paper, we address the joint capacitated lot sizing and capacity acquisition problem. The firm can produce goods in each of the finite periods into which the production season is partitioned. Fixed as well as variable production costs are incurred for each production batch, along with inventory carrying costs. The production per period is limited by a capacity restriction. The underlying capacity must be purchased up front for the upcoming season and remains constant over the entire season. We assume that the capacity acquisition cost is smooth and convex. For this situation, we develop a model, which combines the complexity of time-varying demand and cost functions and that of scale economies arising from dynamic lot-sizing costs with the purchase cost of capacity. We propose a heuristic algorithm that runs in polynomial time to determine a good capacity level and corresponding lot sizing plan simultaneously. Numerical experiments show that our method is a good trade-off between solution quality and running time.

AB - One of the fundamental problems in operations management is to determine the optimal investment in capacity. Capacity investment consumes resources and the decision is often irreversible. Moreover, the available capacity level affects the action space for production and inventory planning decisions directly. In this paper, we address the joint capacitated lot sizing and capacity acquisition problem. The firm can produce goods in each of the finite periods into which the production season is partitioned. Fixed as well as variable production costs are incurred for each production batch, along with inventory carrying costs. The production per period is limited by a capacity restriction. The underlying capacity must be purchased up front for the upcoming season and remains constant over the entire season. We assume that the capacity acquisition cost is smooth and convex. For this situation, we develop a model, which combines the complexity of time-varying demand and cost functions and that of scale economies arising from dynamic lot-sizing costs with the purchase cost of capacity. We propose a heuristic algorithm that runs in polynomial time to determine a good capacity level and corresponding lot sizing plan simultaneously. Numerical experiments show that our method is a good trade-off between solution quality and running time.

KW - Supply chain management

KW - Lot sizing

KW - Capacity

KW - Approximation

KW - Heuristics

M3 - Working paper

T3 - Management Science Working Paper Series

BT - Capacitated Dynamic Lot Sizing with Capacity Acquisition

PB - The Department of Management Science

CY - Lancaster University

ER -