Multi-item Simultaneous Lot Sizing and Storage Allocation with Production and Warehouse Capacities

Abstract

This paper addresses simultaneous capacitated lot sizing and storage allocation in a multi-item manufacturing environment. The Capacitated Lot Sizing Problem (CLSP) is a very crucial tactical level decision making problem resulting in production amounts and replenishment cycles in a dynamic demand environment. Regarding the capacity aspect, there may be different kinds of sources. Capacity bounds may be set on production capacity, and there may also be another upper bound on the units-on-hand inventory due to limited warehouse capacity which is a direct outcome of an adapted storage allocation policy in warehouse activities. Solving such an extended CLSP is proved to suffer from NP-hardness properties. Hence, heuristic algorithms are required to simultaneously solve lot sizing and pre-defined storage allocation problems. The aim of the study is to present a two-stage metaheuristic algorithm to solve related problems in polynomial time under different storage allocation policy boundaries on inventory. The proposed algorithm utilizes transfer of lots between consecutive periods. Results show that storage allocation policies which are primary drivers of inventory boundaries directly affect the results obtained. The algorithm is also applied to a shop floor planning problem.