Multi-Level Lot Sizing Problem with Deterioration Inventory and Disposal Costs

Abstract

Abstract In this paper, the multi-level lot sizing problem which is used to determine the production lot sizes in industrial environments, has been investigated. A new problem which we refer to it as “multi-level lot sizing problem with deterioration inventory and disposal costs” is introduced. The aim of multi-level lot sizing problem is to determine the production quantity of production periods for each product in each level, such the the total cost containing production costs, holding costs and setup costs to be minimized. In the proposed model, the deterioration property of the inventory is assumed. Furthermore, disposal costs that represents the costs for removing the perishable inventories from the storage environments, is combined with the generalized model in order to make the model closer to reality. The aim of the new problem, are determining the production quantity of production periods for each product in each level, and determining the periods in which the perishable inventory to be disposed. Therefore, the disposal costs is considered in the objective function of the problem. Two meta heuristic algorithms consist of genetic algorithm and simulated annealing algorithm is used to solve the proposed problem. In order to compare the performance of the proposed algorithms with existing methods in the literature, instance problems are created, and the results are analyzed.

Keywords

• multi-level lot sizing problem
• deterioration inventory
• disposal costs
• genetic algorithm
• simulated annealing algorithm