An optimization framework for solving capacitated multi-level lot-sizing problems with backlogging

This paper proposes two new mixed integer programming models for capacitated multi-level lot-sizing problems with backlogging, whose linear programming relaxations provide good lower bounds on the optimal solution value. We show that both of these strong formulations yield the same lower bounds. In addition to these theoretical results, we propose a new, effective optimization framework that achieves high quality solutions in reasonable computational time. Computational results show that the proposed optimization framework is superior to other well-known approaches on several important performance dimensions

On the equivalence of strong formulations for capacitated multi-level lot sizing problems with setup times

Several mixed integer programming formulations have been proposed for modeling capacitated multi-level lot sizing problems with setup times. These formulations include the so-called facility location formulation, the shortest route formulation, and the inventory and lot sizing formulation with (l,S) inequalities. In this paper, we demonstrate the equivalence of these formulations when the integrality requirement is relaxed for any subset of binary setup decision variables. This equivalence has significant implications for decomposition-based methods since same optimal solution values are obtained no matter which formulation is used. In particular, we discuss the relax-and-fix method, a decomposition-based heuristic used for the efficient solution of hard lot sizing problems. Computational tests allow us to compare the effectiveness of different formulations using benchmark problems. The choice of formulation directly affects the required computational effort, and our results therefore provide guidelines on choosing an effective formulation during the development of heuristic-based solution procedures

Mixed integer programming in production planning with backlogging and setup carryover : modeling and algorithms

This paper proposes a mixed integer programming formulation for modeling the capacitated multi-level lot sizing problem with both backlogging and setup carryover. Based on the model formulation, a progressive time-oriented decomposition heuristic framework is then proposed, where improvement and construction heuristics are effectively combined, therefore efficiently avoiding the weaknesses associated with the one-time decisions made by other classical time-oriented decomposition algorithms. Computational results show that the proposed optimization framework provides competitive solutions within a reasonable time

Lot-Sizing of Several Multi-Product Families

Production planning problems and its variants are widely studied in operations management and optimization literature. One variation that has not garnered much attention is the presence of multiple production families in a coordinated and capacitated lot-sizing setting. While its single-family counterpart has been the subject of many advances in formulations and solution techniques, the latest published research on multiple family problems was over 25 years ago (Erenguc and Mercan, 1990; Mercan and Erenguc, 1993). Chapter 2 begins with a new formulation for this coordinated capacitated lot-sizing problem for multiple product families where demand is deterministic and time-varying. The problem considers setup and holding costs, where capacity constraints limit the number of individual item and family setup times and the amount of production in each period. We use a facility location reformulation to strengthen the lower bound of our demand-relaxed model. In addition, we combine Benders decomposition with an evolutionary algorithm to improve upper bounds on optimal solutions. To assess the performance of our approach, single-family problems are solved and results are compared to those produced by state-of-the-art heuristics by de Araujo et al. (2015) and Süral et al. (2009). For the multi-family setting, we first create a standard test bed of problems, then measure the performance of our heuristic against the SDW heuristic of Süral et al. (2009), as well as a Lagrangian approach. We show that our Benders approach combined with an evolutionary algorithm consistently achieves better bounds, reducing the duality gap compared to other single-family methods studied in the literature. Lot-sizing problems also exist within a vendor-managed-inventory setting, with production-planning, distribution and vehicle routing problems all solved simultaneously. By considering these decisions together, companies achieve reduced inventory and transportation costs compared to when these decisions are made sequentially. We present in Chapter 3 a branch-and-cut algorithm to tackle a production-routing problem (PRP) consisting of multiple products and customers served by a heterogeneous fleet of vehicles. To accelerate the performance of this algorithm, we also construct an upper bounding heuristic that quickly solves production-distribution and routing subproblems, providing a warm-start for the branch-and-cut procedure. In four scenarios, we vary the degree of flexibility in demand and transportation by considering split deliveries and backorders, two settings that are not commonly studied in the literature. We confirm that our upper bounding procedure generates high quality solutions at the root node for reasonably-sized problem instances; as time horizons grow longer, solution quality degrades slightly. Overall costs are roughly the same in these scenarios, though cost proportions vary. When backorders are not allowed (Scenarios 1 and 3), inventory holding costs account for over 90% of total costs and transportation costs contribute less than 0.01%. When backorders are allowed (Scenarios 2 and 4), most of the cost burden is shouldered by production, with transportation inching closer to 0.1% of total costs. In our fifth scenario for the PRP with multiple product families, we employ a decomposition heuristic for determining dedicated routes for distribution. Customers are clustered through k-means++ and a location-alloction subproblem based on their contribution to overall demand, and these clusters remain fixed over the entire planning horizon. A routing subproblem dictates the order in which to visit customers in each period, and we allow backorders in the production-distribution routine. While the branch-and-cut algorithm for Scenarios 1 through 4 quickly finds high quality solutions at the root node, Scenario 5's dedicated routes heuristic boasts high vehicle utilization and comparable overall costs with minimal computational effort

Meta-Heuristics for Dynamic Lot Sizing: a review and comparison of solution approaches

Proofs from complexity theory as well as computational experiments indicate that most lot sizing problems are hard to solve. Because these problems are so difficult, various solution techniques have been proposed to solve them. In the past decade, meta-heuristics such as tabu search, genetic algorithms and simulated annealing, have become popular and efficient tools for solving hard combinational optimization problems. We review the various meta-heuristics that have been specifically developed to solve lot sizing problems, discussing their main components such as representation, evaluation neighborhood definition and genetic operators. Further, we briefly review other solution approaches, such as dynamic programming, cutting planes, Dantzig-Wolfe decomposition, Lagrange relaxation and dedicated heuristics. This allows us to compare these techniques. Understanding their respective advantages and disadvantages gives insight into how we can integrate elements from several solution approaches into more powerful hybrid algorithms. Finally, we discuss general guidelines for computational experiments and illustrate these with several examples