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The two-level lot-sizing problem with outbound shipment

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  • Hwang, Hark-Chin
  • Kang, Jangha

Abstract

We consider the two-level lot-sizing problem for the integrated replenishment and dispatch plan of a third-party logistics company and distribution center. Each outbound shipment for a dispatch involves cargos that incur a stepwise transportation cost. To increase the effect of shipment consolidation, the distribution center allows backlogging. This problem has the characteristics of capacitated and uncapacitated lot-sizing. A forward dynamic program is applied to exploit the beneficial characteristic of the uncapacitated problem. The forward dynamic program is implemented using Zangwill partitions to decrease the number of computational parameters with legitimacy checks to guarantee optimality. Employing these techniques, we provide an O(T4) algorithm, which serves as an improvement on the O(T6) algorithm of previous research. Moreover, computational results from actual implementations show that our algorithm is significantly faster than that of prior research.

Suggested Citation

  • Hwang, Hark-Chin & Kang, Jangha, 2020. "The two-level lot-sizing problem with outbound shipment," Omega, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:jomega:v:90:y:2020:i:c:s0305048317312239
    DOI: 10.1016/j.omega.2018.11.006
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    Cited by:

    1. Hwang, Hark-Chin & Kang, Jangha, 2021. "An improved algorithm for the lot-sizing problem with outbound shipment," Omega, Elsevier, vol. 100(C).
    2. Jing, Fuying & Chao, Xiangrui, 2022. "Forecast horizons for a two-echelon dynamic lot-sizing problem," Omega, Elsevier, vol. 110(C).
    3. Jing, Fuying & Chao, Xiangrui, 2021. "A dynamic lot size model with perishable inventory and stockout," Omega, Elsevier, vol. 103(C).
    4. Liu, Jia-Cai & Sheu, Jiuh-Biing & Li, Deng-Feng & Dai, Yong-Wu, 2021. "Collaborative profit allocation schemes for logistics enterprise coalitions with incomplete information," Omega, Elsevier, vol. 101(C).

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