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Simulation Optimization for the Stochastic Economic Lot Scheduling Problem

Löhndorf, Nils and Minner, Stefan (2013) Simulation Optimization for the Stochastic Economic Lot Scheduling Problem. IIE Transactions, Special Issue: Advances in Simulation Optimization and Its Applications, 45 (7). pp. 796-810. ISSN 1545-8830

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Abstract

We study simulation optimization methods for the stochastic economic lot scheduling problem. In contrast to prior research, we focus on methods that treat this problem as a black box. Based on a large-scale numerical study, we compare approximate dynamic programming with a global search for parameters of simple control policies. We propose two value function approximation schemes based on linear combinations of piecewise- constant functions as well as control policies that can be described by a small set of parameters. While approximate value iteration worked well for small problems with three products, it was clearly outperformed by the global policy search as soon as problem size increased. The most reliable choice in our study was a globally optimized fixed-cycle policy. An additional analysis of the response surface of model parameters on optimal average cost revealed that the cost effect of product diversity was negligible. (authors' abstract)

Item Type: Article
Additional Information: To see the final version of this paper please visit the publisher's website. Access to the published version may require a subscription.
Keywords: Inventory / Multi-Product / Lot-Sizing and Scheduling / Stochastic Demand / Simulation Optimization / Approximate Dynamic Programming
Divisions: Departments > Informationsverarbeitung u Prozessmanag. > Produktionsmanagement
Version of the Document: Accepted for Publication
Depositing User: ePub Administrator
Date Deposited: 02 Dec 2013 13:46
Last Modified: 10 Apr 2014 15:48
Related URLs:
FIDES Link: https://bach.wu.ac.at/d/research/results/60250/
URI: http://epub.wu.ac.at/id/eprint/4042

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