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Solving a Production Lot-Sizing and Scheduling Problem from an Enhanced Inventory Management Perspective

Author

Listed:
  • Dražen Popović

    (Department of Logistics, Faculty of Transport and Traffic Engineering, University of Belgrade, 11000 Belgrade, Serbia)

  • Nenad Bjelić

    (Department of Logistics, Faculty of Transport and Traffic Engineering, University of Belgrade, 11000 Belgrade, Serbia)

  • Milorad Vidović

    (Department of Logistics, Faculty of Transport and Traffic Engineering, University of Belgrade, 11000 Belgrade, Serbia)

  • Branislava Ratković

    (Department of Logistics, Faculty of Transport and Traffic Engineering, University of Belgrade, 11000 Belgrade, Serbia)

Abstract

In this study, we consider a production lot-sizing and scheduling problem found in the fruit juice production industry from an enhanced inventory management perspective. The problem can be classified as a P2SMM (two-stage multi-machine lot-scheduling) problem. We extended the classical P2SMM problem by incorporating an additional inventory management aspect of finished products to reflect a possible real-life case problem, specifically regarding the shelf-life concept and limited warehouse capacity, with a possibility of outsourcing the warehousing demand to a third-party logistics company. We developed the mixed integer linear programming (MILP) model to fully represent the considered problem (due to the NP-hard nature of the problem, only small-scale instances could be solved to optimality), and the hybrid variable neighborhood search with linear programming (VNS/LP) model to solve both small and real-life large-scale problem instances. The goal of the developed models is to minimize total costs that consist of the cost of backordering, the cost of planned minimum and maximum stock level violation, the cost of warehouse capacity overflow, the costs of production setup time and unused available production time. The main idea of the VNS/LP model is to solve the scheduling segment of P2SMM (the production sequence) via a VNS heuristic, and the lot-sizing segment of P2SMM via the linear programming (LP) model. Based on the results from five variants of the problem setup, a potential decision maker can have an overview of the impact of different important input parameters (production time costs, warehouse capacity and costs, inventory related costs and production demand) on the total cost of a production process and improve its efficiency in changing conditions.

Suggested Citation

  • Dražen Popović & Nenad Bjelić & Milorad Vidović & Branislava Ratković, 2023. "Solving a Production Lot-Sizing and Scheduling Problem from an Enhanced Inventory Management Perspective," Mathematics, MDPI, vol. 11(9), pages 1-23, April.
    • Handle: RePEc:gam:jmathe:v:11:y:2023:i:9:p:2099-:d:1135681
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    References listed on IDEAS

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    1. Almada-Lobo, Bernardo & Oliveira, José F. & Carravilla, Maria Antónia, 2008. "Production planning and scheduling in the glass container industry: A VNS approach," International Journal of Production Economics, Elsevier, vol. 114(1), pages 363-375, July.
    2. José Roberto Dale Luche & Reinaldo Morabito & Vitória Pureza, 2009. "Combining Process Selection And Lot Sizing Models For Production Scheduling Of Electrofused Grains," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 26(03), pages 421-443.
    3. Alyne Toscano & Deisemara Ferreira & Reinaldo Morabito, 2019. "A decomposition heuristic to solve the two-stage lot sizing and scheduling problem with temporal cleaning," Flexible Services and Manufacturing Journal, Springer, vol. 31(1), pages 142-173, March.
    4. Ferreira, Deisemara & Morabito, Reinaldo & Rangel, Socorro, 2009. "Solution approaches for the soft drink integrated production lot sizing and scheduling problem," European Journal of Operational Research, Elsevier, vol. 196(2), pages 697-706, July.
    5. Ferreira, Deisemara & Clark, Alistair R. & Almada-Lobo, Bernardo & Morabito, Reinaldo, 2012. "Single-stage formulations for synchronised two-stage lot sizing and scheduling in soft drink production," International Journal of Production Economics, Elsevier, vol. 136(2), pages 255-265.
    6. Fabrizio Marinelli & Maria Nenni & Antonio Sforza, 2007. "Capacitated lot sizing and scheduling with parallel machines and shared buffers: A case study in a packaging company," Annals of Operations Research, Springer, vol. 150(1), pages 177-192, March.
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