Discrete Lot-Sizing and Scheduling with Sequence-Dependent Setup Times and Costs Including Deterioration and Perishability Constraints

Abstract

Deterioration and perishability constraints force organizations to carefully plan their production in cooperation with their supply chain partners up- and downstream. This is important because waiting times due to suboptimal planning give rise to increasing lead times and, consequently, to depreciation of parts and products while waiting and, thus, decreasing quality of items, so that, in the worst case, they cannot be used. Increased costs are only one problem. A more troubling aspect is unsatisfied customers waiting for their products or being concerned about quality. Reducing lot sizes leads to lower inventory holding (costs), but also to increased setup costs. Therefore, lot size planning seeks to weigh the trade-off costs of setup costs and costs of inventory holding. The limits of lifetimes of parts and products in the production process increase the complexity of planning, especially if setup times and costs are dependent on the sequence of items. We analyze lot sizing models with sequence-dependent setup times and costs extending them to depreciation effects.