An evaluation of heuristic performance in multi-stage lot-sizing systems

Abstract

The purpose of this paper is to determine the cost effectiveness of recently proposed single-stage lot-sizing algorithms in multi-stage settings. Seven different algorithms and six comhinations of methods were examined in conjunction with four cost modification procedures. These procedures attempt to account for the interdependencies across stages by altering the costs employed for decision-making purposes. A series of simulation experiments was conducted where the set-up cost, the product structure, and the demand distribution were varied. It is concluded that the combination methods when used with some of the cost modifications result in enhanced performance in comparison to other sequential approaches.