A heuristic method for lot-sizing in multi-stage systems

This article considers the lot-sizing problem in multi-stage production settings with capacity-constrained resources. This problem deals with the determination of a production plan for the end item and its components in order to meet the forecast demand in each period of a planning horizon. The production plan should minimize the sum of production, setup and inventory costs. A heuristic method build upon a formulation of the problem in terms of echelon stock is developed. Computational results are reported and the solutionsʹ quality is evaluated through Lagrangean lower bounds.