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Title: The stochastic lot-sizing problem with quantity discounts
Authors: Jiao, Wen
Zhang, Ju-Liang
Yan, Hong
Keywords: Inventory
Stochastic lot-sizing problem
All-unit quantity discounts
Polynomial time algorith
Issue Date: 2017
Publisher: © Elsevier
Citation: JIAO, W., ZHANG, J-L. and YAN, H., 2017. The stochastic lot-sizing problem with quantity discounts. Computers & Operations Research, 80 pp. 1-10.
Abstract: This paper addresses the stochastic lot-sizing problem with quantity discounts. In particular, we examine the uncapacitated finite-period economic lot-sizing problem in which the parameters in each period are random and discrete. When an order is placed, a fixed cost is incurred and an all-unit quantity discount is awarded based on the quantity ordered. The lead time is zero and the order is delivered immediately. First we study the case with overstocks by which the excess inventory incurs a holding cost. The objective in this case is to minimize the expected total cost including ordering and holding costs. The stochastic dynamics is modeled with a scenario tree. We characterize properties of the optimal policy and propose a polynomial time algorithm with complexity O ( n 3 ) for single discount level, where n is the number of nodes in the scenario tree. We extend the results to cases allowing stockout and multi-discount levels. Numerical experiments are conducted to evaluate the performance of the algorithm and to gain the man- agement insights.
Description: This paper was published in the journal Computers & Operations Research and the definitive published version is available at https://doi.org/10.1016/j.cor.2016.11.014.
Sponsor: This work is supported in part by the National Natural Science Foundation of China (grant no. 71390334 ) and supported by the Program for New Century Excellent Talents in University (NCET-13-0660). This work is also supported by the NSFC/RGC Joint Research Scheme (3-RAA7, 7161101015).
Version: Accepted for publication
DOI: 10.1016/j.cor.2016.11.014
URI: https://dspace.lboro.ac.uk/2134/26456
Publisher Link: https://doi.org/10.1016/j.cor.2016.11.014
ISSN: 0305-0548
Appears in Collections:Published Articles (Business)

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