Heuristics for the stochastic economic lot sizing problem with remanufacturing under backordering costs

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Kilic O. A., TUNÇ H.

EUROPEAN JOURNAL OF OPERATIONAL RESEARCH, vol.276, no.3, pp.880-892, 2019 (SCI-Expanded) identifier identifier


We consider a production system where demand can be met by manufacturing new products and re manufacturing returned products, and address the economic lot sizing problem therein. The system faces stochastic and time-varying demands and returns over a finite planning horizon. The problem is to match supply with demand, while minimizing the total expected cost which is comprised of fixed production costs and inventory (holding and backordering) costs. We introduce heuristic policies for this problem which offer different levels of flexibility with respect to production decisions. We present computational methods for these policies based on convex optimization and certainty equivalent mixed integer programming, and numerically assess their cost performance and computational efficiency by means of simulation. (C) 2019 Elsevier B.V. All rights reserved.