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Dynamic Economic Lot Size Models with Period-Pair-Dependent Backorder and Inventory Costs

School of Management, George Mason University, Fairfax, Virginia 22030
Department of Management Sciences, Henry B. Tippie College of Business, University of Iowa, Iowa City, Iowa 52242
vhsu{at}som.gmu.edu
timothy-lowe{at}uiowa.edu

Inventory and backorder cost functions in the classical Wagner-Whitin economic lot size (ELS) models are typically period-pair-independent (pp-independent) in the sense that inventoried units carried (or backorders in existence) in a given period are treated the same regardless of the periods in which they are produced (placed) or the periods in which they are used (filled). We consider versions of the problem where inventory and backorder costs are pp-dependent, as well as versions where backorder costs, but not inventory costs, are pp-dependent. Recognizing that the problems considered are NP-hard, we provide cases where the cost structure allows polynomial solvability via dynamic programming.

Subject classifications: Dynamic Programming, Applications: Solving economic lot size problems; Inventory/production, perishable/aging: ECS problems with holding and backorder costs; Production-scheduling, planning: lot sizing models over a finite horizon.
History: Received June 1997; revision received September 1998; revision received August 1999; accepted November 1999.

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