Multiple cycle economic lot and delivery-scheduling problem in a two-echelon supply chain

Abstract

This paper addresses the problem of lot sizing, scheduling, and delivery of several items in a two-echelon supply chain over a finite planning horizon. Single supplier produces the items through a flexible flow line and delivers them directly to an assembly facility where the transfer of sub-lots between adjacent stages of supplier’s production system (i.e., lot streaming) is allowed in order to decrease the manufacturing lead time. At first, a mixed zero-one nonlinear programming model is developed based on the so-called basic period (BP) approach aiming to minimize the average setup, inventory holding, and delivery costs per unit time in the supply chain without any stock-out. The problem is very complex and cannot be solved to optimality especially for real-sized problems. Therefore, two efficient hybrid genetic algorithms (HGA) are proposed based on the power-of-two (PTHGA) and non-power-of-two (NPTHGA) variants of BP approach. The solution qualities of the proposed algorithms are compared with a proposed lower bound. Numerical experiments demonstrate that the NPTHGA outperforms the PTHGA algorithm with respect to the solution quality, but the PTHGA outperforms the NPTHGA with respect to the computation time.