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Forecast horizons for a two-echelon dynamic lot-sizing problem

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  • Jing, Fuying
  • Chao, Xiangrui

Abstract

This paper examines the forecast horizons under the settings of two-echelon dynamic lot-sizing models with durable and perishable products, where the first echelon also has its own external demands. In the model of durable products, inventory costs are age-independent. In the model of perishable products, inventory deterioration and costs are age-dependent. On the basis of certain significant properties in an optimal solution, forward dynamic programming algorithms are developed for solving the two models of durable and perishable products. Furthermore, we establish monotone properties of production and regeneration points and provide sufficient conditions to obtain forecast horizons under two cases of durable and perishable products. By conducting several numerical experiments, managerial insights are obtained regarding the influence of integrated decision, external demands at the first echelon, perishability and costs’ parameters on forecast horizons. A rolling horizon decision-making is an easy-to-use practice in dynamic lot-sizing problems. We test the performance of the rolling horizon approach in a numerical experiment.

Suggested Citation

  • Jing, Fuying & Chao, Xiangrui, 2022. "Forecast horizons for a two-echelon dynamic lot-sizing problem," Omega, Elsevier, vol. 110(C).
    • Handle: RePEc:eee:jomega:v:110:y:2022:i:c:s0305048322000226
    DOI: 10.1016/j.omega.2022.102613
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