Solving the single-item, capacitated dynamic lot-sizing problem with startup and reservation costs by tabu search

A capacitated, single-item lot-sizing model is considered where a startup cost is incurred for switching the production facility on and a separate reservation cost is incurred for keeping the facility on whether it is used for production or not. Computationally, the problem corresponding to this model is NP-hard. The Tabu search scheme developed for solving the problem proved capable of reaching the optimal solution for a large number of varied problem instances tested. Characteristics of the problem relevant to the development of the Tabu search scheme are elaborated and results of computational testing are presented.