Efficient Heuristics for MRP Lot Sizing with Variable Production/Purchasing Costs*

Abstract

ABSTRACTTwo heuristics based on branch and bound (B&B) are developed to solve closed‐loop material requirements planning (MRP) lot‐sizing problems that have general product structures and variable costs. A “look ahead method'’(LAM) heuristic allows for variable production/purchasing costs and uses a single‐level B&B procedure to rapidly improve lower bound values; thus, LAM efficiently uses computer‐storage capacity and allows solution of larger problems. The “total average modification'’(TAM) heuristic uses B&B, applied level by level, and modified setup and carrying costs to solve the variable production/purchasing costs MRP lot‐sizing problem. LAM and TAM are tested on problems and compared to heuristics in the literature. TAM may be used to solve large MRP lot‐sizing problems encountered in practice.