In this paper, we develop mixed integer linear programming models to compute near-optimal policy parameters for the non-stationary stochastic lot sizing problem under Bookbinder and Tan’s static-dynamic uncertainty strategy. Our models build on piecewise linear upper and lower bounds of the first order loss function. We discuss different formulations of the stochastic lot sizing problem, in whi...

This chapter intends to give an overview of the literature on dynamic lot-sizing models and stochastic transshipment models. These two types of models are used as a basis for developing models with substitution in the following chapters. Section 2.1 contains a classification of models for dynamic lot-sizing / production planning, and selected models. In Sect. 2.2, we give a brief overview of av...

In a typical purchasing situation, the issues of price, lot sizing, etc, usually are settled through negotiations between the purchaser and the vendor. Depending on the existing balance of power, the end result of such a bargaining process may be a near-optimal or optimal ordering policy for one of the parties (placing the other in a position of significant disadvantage) or, sometimes, inoptima...

This chapter intends to give an overview of the literature on dynamic lot-sizing models and stochastic transshipment models. These two types of models are used as a basis for developing models with substitution in the following chapters. Section 2.1 contains a classification of models for dynamic lot-sizing / production planning, and selected models. In Sect. 2.2, we give a brief overview of av...

This chapter intends to give an overview of the literature on dynamic lot-sizing models and stochastic transshipment models. These two types of models are used as a basis for developing models with substitution in the following chapters. Section 2.1 contains a classification of models for dynamic lot-sizing / production planning, and selected models. In Sect. 2.2, we give a brief overview of av...