Stan van Hoesel, H. Edwin Romeijn, Dolores Romero Morales, Albert P.M. Wagelmans
Integrated lot-sizing in serial supply chains with
production capacities
We consider a model for a serial supply chain in which production,
inventory, and transportation decisions are integrated, in the
presence of production capacities and for different transportation
cost functions. The model we study is a generalization of the
traditional single-item economic lot-sizing model, adding
stationary production capacities at the manufacturer, as well as
multiple intermediate storage levels (including the retailer
level), and transportation between these levels. Allowing for
general concave production costs and linear holding costs, we
provide polynomial time algorithms for the cases where the
transportation costs are either linear, or are concave with a
fixed-charge structure. In the latter case, we make the additional
common and reasonable assumption that the variable transportation
and inventory costs are such that holding inventories at higher
levels in the supply chain is more attractive from a variable cost
perspective. The running times of the algorithms are remarkably
insensitive to the number of levels in the supply
chain.