Heuristic policies for the stochastic economic lot sizing problem with remanufacturing under service level constraints

• Published in: European journal of operational research Vol. 267; no. 3; pp. 1102 - 1109
• Main Authors: Kilic, Onur A., Tunc, Huseyin, Tarim, S. Armagan
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 16.06.2018
• Subjects: Heuristic; Inventory; Mixed integer programming; Remanufacturing; Stochastic lot-sizing; Mixed integer programming; Remanufacturing; Stochastic lot-sizing; Inventory; Heuristic
• ISSN: 0377-2217; 1872-6860
• DOI: 10.1016/j.ejor.2017.12.041

•The stochastic economic lot sizing problem with remanufacturing is addressed.•Heuristic policies that make use of simple decision rules are proposed.•Mathematical models are developed to obtain the parameters of heuristic policies. In this paper, we address the stochastic economic lot sizing problem with remanufacturing under service level constraints. The problem emerges in hybrid production systems where demand can be met via two alternative sources: manufacturing new products and remanufacturing returned products. The deterministic counterpart of this problem has been considered in the literature and it is shown to be NP-Hard. We focus on the case where period demands and returns are stochastic. The optimal solution to this problem is not a deterministic production schedule but a control policy, yet its structure has not yet been characterized. We propose two heuristic policies for the problem that make use of simple decision rules to control manufacturing and remanufacturing operations and present mathematical models thereof.