Capacitated stochastic lot-sizing and production planning problem under demand uncertainty

Abstract

This paper proposes two multi-period, multi-item capacitated stochastic lot-sizing problems under demand uncertainty. We model uncertainty via a scenario tree. The first model considers production, inventory, backlogging, line status, and worker group assignment decisions, where inventory and backlogging decisions have wait-and-see structure. The second model converts line status and worker group assignment decisions to the wait-and-see structure. Also, the second model enables us to take corrective extra-ordering decisions using scenario-based wait-and-see decisions. Numerical results compare the optimality and CPU time performances of two models and solution approaches using a data set inspired by a real-life electronics company.