The stochastic lot-sizing problem with lost sales: A chemical-Petrochemical case study

Abstract

The recent evidence shows that production planning problems (e.g. lot sizing) in the manufacturing systems in general, and in the petrochemical sector in particular, can be very challenging. This fact, that the flows of chemical materials usually are continuous and the demands of chemical-petrochemical products inherently are uncertain, motivating researchers and practitioners to deal with stochastic lot sizing models in this manufacturing systems. This paper formulates such problems by taking distribution functions (discreet and continuous) into account. Moreover, lost sales are considered under the “static uncertainty” strategy. A solution methodology, additionally, is presented to determine the optimal timing and level of orders, when demand is defined by a discrete distribution function. To show the efficiency and effectiveness of proposed models and solution algorithm, a chemical-petrochemical case study as well as two other numerical example are described and solved.