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The stochastic lot-sizing problem with quantity discounts
journal contribution
posted on 2017-09-12, 10:06 authored by Wendy Jiao, Ju-Liang Zhang, Hong YanThis paper addresses the stochastic lot-sizing problem with quantity discounts. In particular, we examine the uncapacitated finite-period economic lot-sizing problem in which the parameters in each period are random and discrete. When an order is placed, a fixed cost is incurred and an all-unit quantity discount is awarded based on the quantity ordered. The lead time is zero and the order is delivered immediately. First we study the case with overstocks by which the excess inventory incurs a holding cost. The objective in this case is to minimize the expected total cost including ordering and holding costs. The stochastic dynamics is modeled with a scenario tree. We characterize properties of the optimal policy and propose a polynomial time algorithm with complexity O ( n 3 ) for single discount level, where n is the number of nodes in the scenario tree. We extend the results to cases allowing stockout and multi-discount levels. Numerical experiments are conducted to evaluate the performance of the algorithm and to gain the man- agement insights.
Funding
This work is supported in part by the National Natural Science Foundation of China (grant no. 71390334 ) and supported by the Program for New Century Excellent Talents in University (NCET-13-0660). This work is also supported by the NSFC/RGC Joint Research Scheme (3-RAA7, 7161101015).
History
School
- Business and Economics
Department
- Business
Published in
Computers & Operations ResearchVolume
80Pages
1 - 10Citation
JIAO, W., ZHANG, J-L. and YAN, H., 2017. The stochastic lot-sizing problem with quantity discounts. Computers & Operations Research, 80 pp. 1-10.Publisher
© ElsevierVersion
- AM (Accepted Manuscript)
Publisher statement
This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/Acceptance date
2016-11-14Publication date
2017-11-15Notes
This paper was published in the journal Computers & Operations Research and the definitive published version is available at https://doi.org/10.1016/j.cor.2016.11.014.ISSN
0305-0548Publisher version
Language
- en