A modified variable neighborhood search algorithm for dynamic lot-sizing with supplier selection under varying delivery time quotation

Abstract

This paper investigates a dynamic lot-sizing problem with supplier selection, where the manufacturer develops an aggregate plan to meet product delivery demand with the objective of minimizing the cost. Specifically, a novel supplier selection scenario with varying delivery time quotation is considered, i.e., the manufacturer places raw material replenishment orders with varying delivery time quotation and dynamically selects suppliers, and the suppliers guarantee delivery within the quoted delivery lead time. In the dynamic lot-sizing problem with supplier selection, a joint decision on the production plan, replenishment order, and supplier selection needs to be made. To tackle this complex problem, a modified Variable Neighborhood Search algorithm with nested two parallel neighborhoods (PN-VNS) is first developed for the decision on the production plan and replenishment order. Then, the decision on supplier selection needs to be made for the given replenishment order, and a pre-pruning optimization rule is proposed to obtain the optimal supplier scheme. Computational experiments are conducted to evaluate the performance of the proposed algorithm, and the experimental results demonstrate that our algorithm performs better both in terms of solution quality and running time.