Simulation optimization for the stochastic economic lot scheduling problem with sequence-dependent setup times

• Published in: International journal of production economics Vol. 157; pp. 170 - 176
• Main Authors: Löhndorf, Nils, Riel, Manuel, Minner, Stefan
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.11.2014; Elsevier Sequoia S.A
• Subjects: Heuristic; Inventory; Iterative methods; Job shops; Lot-sizing and scheduling; Multi-product; Optimization techniques; Production scheduling; Sequence-dependent setups; Simulation optimization; Stochastic demand; Stochastic models; Studies; Traveling salesman problem; Multi-product; Lot-sizing and scheduling; Simulation optimization; Sequence-dependent setups; Inventory; Stochastic demand
• ISSN: 0925-5273; 1873-7579
• DOI: 10.1016/j.ijpe.2014.05.006

We consider the stochastic economic lot scheduling problem (SELSP) with lost sales and random demand where switching between products is subject to sequence-dependent setup times. We propose a solution based on simulation optimization using an iterative two-step procedure which combines global policy search with local search heuristics for the traveling salesman sequencing subproblem. To optimize the production cycle, we compare two criteria: minimizing total setup times and evenly distributing setups to obtain a more regular production cycle. Based on a numerical study, we find that a policy with a balanced production cycle leads to lower cost than other policies with unbalanced cycles. •This paper analyzes the stochastic economic lot-scheduling problem with sequence dependent setup times.•A simulation optimization methodology is presented.•The proposed policy with balanced setups for the products outperforms other fixed-cycle policies.