Journal
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Volume 257, Issue 2, Pages 483-493Publisher
ELSEVIER
DOI: 10.1016/j.ejor.2016.07.028
Keywords
Inventory; Lot sizing; Capacity reservation contract; Complexity; Polynomial time algorithm
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In this paper, we study the single-item lot sizing problem under a capacity reservation contract. A manufacturer is replenished by an external supplier with batch deliveries and a certain capacity is reserved at the supplier level with an advantageous cost. In addition to the classical ordering and inventory holding costs, for each batch ordered under the reserved capacity a fixed cost per batch is incurred; and for batches exceeding this capacity a higher fixed cost per batch is paid, typically through the purchase from the spot market. We identify various NP-hard cases, propose a pseudo-polynomial time dynamic programming algorithm under arbitrary parameters, show that the problem admits an FPTAS and give polynomial time algorithms for special cases. We finally state a list of open problems for further research. (C) 2016 Elsevier B.V. All rights reserved.
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