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Simulation Optimization for the Stochastic Economic Lot Scheduling Problem with Sequence-Dependent Setup Times

Nils Löhndorf (nils.loehndorf***at***wu.ac.at)
Manuel Riel (m***at***anuelriel.com)
Stefan Minner (stefan.minner***at***tum.de)

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 outperforms other policies with unbalanced cycles.

Keywords: Inventory, Multi-Product, Lot-Sizing and Scheduling, Stochastic Demand, Sequence-Dependent Setups, Simulation Optimization

Category 1: Other Topics (Optimization of Simulated Systems )

Category 2: Applications -- OR and Management Sciences (Scheduling )

Category 3: Global Optimization (Stochastic Approaches )


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Entry Submitted: 10/20/2012
Entry Accepted: 10/27/2012
Entry Last Modified: 03/31/2014

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