Considering the effect of demand diversity on the performance of different production strategies for the Economic Lot Scheduling Problem

Abstract

We consider the problem of scheduling the production of multiple products on a single facility with limited production capacity, in literature known as Economic Lot Scheduling Problem (ELSP). In this work we compare the performance of five different production strategies for the ELSP under different stationary stochastic demand patterns. The performance, related to total inventory and setup costs, of different approaches to this problem is clearly dependent upon the production environment. In this study we focus on demand rates, as one of the most important parameters affecting this environment. We analyze through a simulation study the effect of diversity on stochastic demand rates, under different utilization levels. The results of our simulation study confirm that the performance of a production strategy is strongly dependent on utilization and homogeneity of demand rates. Therefore, this effect proves that a sensitivity analysis to evaluate the impact of the particular value of these and other parameters on the performance of the production strategies might be a key issue for industrial applications of the ELSP.