Title: A stochastic programming approach to solve a coordinated capacitated stochastic dynamic demand lot-sizing problem with emergency supplies

Authors: Uladzimir Rubasheuski; Johan Oppen; David L. Woodruff

Addresses: Molde University College, Specialised University in Logistics, Britvegen 2, 6411, Molde, Norway ' Molde University College, Specialised University in Logistics, Britvegen 2, 6411, Molde, Norway ' Graduate School of Management, University of California in Davis, One Shields Ave, 95616, Davis, CA, USA

Abstract: We consider the coordinated capacitated lot-sizing problem (CCLSP) with stochastic non-stationary demand. Although the CCLSP with deterministic demand and the uncoordinated CLSP (UCLSP) with stochastic demand have been addressed in the literature, there is no published research on the CCLSP with stochastic demand. Motivated by the case of Stokke, we developed the formulation and solution method for a special case of the CCLSP. Our model is tested in the settings of stochastic and deterministic demand. The stochastic model out-performed the deterministic model with significantly lower total cost, leading to a reduction in inventory costs and to a slight increase in use of emergency supplies.

Keywords: inventory management; coordinated capacitated lot-sizing problem; CCLSP; inventory costs; transportation costs; emergency supplies; stochastic programming; stochastic dynamic problem; scenario generation.

DOI: 10.1504/IJLSM.2018.089170

International Journal of Logistics Systems and Management, 2018 Vol.29 No.2, pp.173 - 189

Received: 12 Mar 2016
Accepted: 26 Jul 2016
Published online: 09 Jan 2018 *

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