Heuristic procedure for a multiproduct dynamic lot‐sizing problem with coordinated replenishments

Abstract

In this article we develop a heuristic procedure for a multiproduct dynamic lot-sizing problem. In this problem a joint setup cost is incurred when at least one product is ordered in a period. In addition to the joint setup cost a separate setup cost for each product ordered is also incurred. The objective is to determine the product lot sizes, over a finite planning horizon, that will minimize the total relevant cost such that the demand in each period for each product is satisfied without backlogging. In this article we present an effective heuristic procedure for this problem. Computational results for the heuristic procedure are also reported. Our computational experience leads us to conclude that the heuristic procedure may be of considerable value as a decision-making aid to production planners in a real-world setting.