Optimal lot-sizing/vehicle-dispatching policies under stochastic lead times and stepwise fixed costs

Date

2003-01-01

Author

Alp, O
Erkip, NK
Gullu, R

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We characterize optimal policies of a dynamic lot-sizing/vehicle-dispatching problem under dynamic deterministic demands and stochastic lead times. An essential feature of the problem is the structure of the ordering cost, where a fixed cost is incurred every time a batch is initiated (or a vehicle is hired) regardless of the portion of the batch (or vehicle) utilized. Moreover, for every unit of demand not satisfied on time, holding and backorder costs are incurred. Under mild assumptions we show that the demand of a period is satisfied from at most three distinct production (dispatching) epochs. We devise a dynamic programming algorithm to compute the production/dispatching quantities and times.

Subject Keywords

Management Science and Operations Research, Computer Science Applications

URI

https://hdl.handle.net/11511/66870

Collections

Department of Industrial Engineering, Article