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Simulation optimization for the stochastic economic lot scheduling problem with sequence-dependent setup times

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  • Löhndorf, Nils
  • Riel, Manuel
  • Minner, Stefan

Abstract

We consider the stochastic economic lot scheduling problem (SELSP) with lost sales and random demand where switching between products is subject to sequence-dependent setup times. We propose a solution based on simulation optimization using an iterative two-step procedure which combines global policy search with local search heuristics for the traveling salesman sequencing subproblem. To optimize the production cycle, we compare two criteria: minimizing total setup times and evenly distributing setups to obtain a more regular production cycle. Based on a numerical study, we find that a policy with a balanced production cycle leads to lower cost than other policies with unbalanced cycles.

Suggested Citation

  • Löhndorf, Nils & Riel, Manuel & Minner, Stefan, 2014. "Simulation optimization for the stochastic economic lot scheduling problem with sequence-dependent setup times," International Journal of Production Economics, Elsevier, vol. 157(C), pages 170-176.
    • Handle: RePEc:eee:proeco:v:157:y:2014:i:c:p:170-176
    DOI: 10.1016/j.ijpe.2014.05.006
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    References listed on IDEAS

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