A price-directed heuristic for the economic lot scheduling problem

The article formulates the well-known economic lot scheduling problem (ELSP) with sequence-dependent setup times and costs as a semi-Markov decision process. Using an affine approximation of the bias function, a semi-infinite linear program is obtained and a lower bound for the minimum average total cost rate is determined. The solution of this problem is directly used in a price-directed, dynamic heuristic to determine a good cyclic schedule. As the state space of the ELSP is non-trivial for the multi-product setting with setup times, the authors further illustrate how a lookahead version of the price-directed, dynamic heuristic can be used to construct and dynamically improve an approximation of the state space. Numerical results show that the resulting heuristic performs competitively with one reported in the literature.