Abstract
This paper presents a periodic review capacitated lot sizing model with limited backlogging and a possibility of emergency orders. The main intention of placing emergency orders is to satisfy the demand as soon as a shortage occurs. It is assumed that the demands are independently distributed in successive periods. There are two resupply modes available: a regular mode and an emergency mode. Hence, no lead-time of emergence orders is assumed, the purchase price could be high. The measure of effectiveness is the total (or average per period) expected cost, which includes holding cost, shortage cost and both types of order costs.The minimum cost is obtained by considering this system as a discrete-time Markov decision process. We use this model to describe a simple and efficient value function algorithm for finding optimal policies. We find propositions on specially structured optimal policies generalizing classical results on (s,S) policies. Some connections of the turnpike policies and optimal infinite policies are presented. Computational results are given through numerical examples.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.