Heuristic for the new coordinated dynamic demand lot-size and delivery planning problem

Abstract

Purpose The purpose of this study is to propose a new coordinated dynamic demand lot-size and delivery planning problem (CDLSDP), in which the delivery policy is integrated into the coordinated dynamic demand lot-size problem (CDLSP). Design/methodology/approach As a non-deterministic polynomial complete (NP-complete) problem, this CDLSDP seems difficult to be solved by a polynomial-time method. To handle this problem effectively and efficiently, a four-phase heuristic that balances the setup and inventory costs in the coordinating and delivery stages is designed to find near-optimal solutions. Findings Numerous computational experiments show that the proposed four-phase heuristic is effective and efficient. For 1,800 experiments with different scales, and different joint setup costs, solutions by the proposed heuristic have an average gap no more than 1.34% from the optimal solution. Research limitations/implications To decrease total system cost, the CDLSDP optimizes the time-phased replenishment and delivery schedule, which includes joint setup cost, item setup, delivery and inventory cost, for each period. An effective and efficient four-phase heuristic is designed to solve the CDLSDP. Originality/value Compared with the traditional CDLSP, the delivery policy is considered by the new CDLSDP. Moreover, the proposed four-phase heuristic is a good candidate for solving the CDLSDP.