THE STOCHASTIC ECONOMIC LOT SCHEDULING PROBLEM - CYCLICAL BASE-STOCK POLICIES WITH IDLE TIMES

In this paper we discuss stochastic Economic Lot Scheduling Problems ( ELSP), i.e., settings where several items need to be produced in a com mon facility with limited capacity, under significant uncertainty rega rding demands, production times, setup times, or combinations thereof. We propose a class of production/inventory strategies for stochastic ELSPs and describe how a strategy which minimizes holding, backlogging , and setup costs within this class can be effectively determined and evaluated. The proposed class of strategies is simple but rich and eff ective: when the facility is assigned to a given item, production cont inues until either a specific target inventory level is reached or a s pecific production batch has been completed; the different items are p roduced in a given sequence or rotation cycle, possibly with idle time s inserted between the completion of an item's production batch and th e setup for the next item. An optimal strategy within the class can be determined, and all relevant performance measures can be evaluated in just a few CPU seconds, using a 486-based PC. We also derive a number of easily computable lower bounds for the optimal cost value and esta blish a comparison with deterministic ELSPs.