Economic Lot Size Models with Constant Demands

Abstract

Production planning is also an area where difficult combinatorial problems appear in day-to-day logistics operations. In this chapter, we analyze problems related to lot sizing when demands are constant and known in advance. Lot sizing in this deterministic setting is essentially the problem of balancing the fixed costs of ordering with the costs of holding inventory. In this chapter, we look at several different models of deterministic lot sizing. First, we consider the most basic single-item model, the economic lot size model. Then we look at coordinating the ordering of several items with a warehouse of limited capacity. Finally, we look at a one-warehouse multiretailer system.