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Lot sizes in a capacity constrained facility: a simulation study of stationary stochastic demand
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Business Administration and Industrial Engineering.ORCID iD: 0000-0002-1173-6713
2005 (English)In: International Journal of Production Economics, ISSN 0925-5273, E-ISSN 1873-7579, Vol. 93-94, no Spec. issue, p. 375-386Article in journal (Refereed) Published
Abstract [en]

This paper considers the scheduling of several different items on a single machine, in literature known as the economic lot scheduling problem, ELSP. One of the characteristics of this problem is that the demand rate is deterministic and constant. However, in a practical situation demand usually varies. In this paper we examine if a deterministic model can be used if demand is stationary stochastic. A dynamic programming approach from Bomberger (Manage. Sci. 12(11) (1966) 778) and a heuristic method from Segerstedt (Int. J. Production Econom. 59(1–3) (1999) 469) are used to calculate lot sizes for four items. The production of these items is simulated with different variations in demand rates. Our conclusion is that a deterministic model of this kind can be used in a practical situation where the demand rate is stationary stochastic, but the models must be complemented by a decision rule; which item to produce and when to produce it. In our tests the heuristic method and the dynamic programming approach perform rather similarly with respect to costs and inventory levels, but the dynamic programming approach results in more backorders when there is small variation in demand rates. This study indicates that the model used for determination of lot sizes is of less importance than the decision rule used for identification of the item to produce and when to produce it.

Place, publisher, year, edition, pages
2005. Vol. 93-94, no Spec. issue, p. 375-386
National Category
Production Engineering, Human Work Science and Ergonomics
Research subject
Industrial Logistics
Identifiers
URN: urn:nbn:se:ltu:diva-15966DOI: 10.1016/j.ijpe.2004.06.034ISI: 000225423600036Scopus ID: 2-s2.0-9544253909Local ID: f8d59f70-7637-11db-962b-000ea68e967bOAI: oai:DiVA.org:ltu-15966DiVA, id: diva2:988942
Note
Validerad; 2005; Bibliografisk uppgift: Proceedings of the Twelfth International Symposium on Inventories; 20061117 (ysko)Available from: 2016-09-29 Created: 2016-09-29 Last updated: 2018-07-10Bibliographically approved

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Brander, PärLevén, ErikSegerstedt, Anders

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