Dynamic lot sizing and facility location

Abstract This paper elaborates on Krarup and Bilde's idea that lot-sizing can be seen as a special case of facility location. Facility location algorithms are shown to perform better than standard dynamic lot-sizing methods. The framework of facility location also offers new ideas for modelling. Particularly, a new modelling approach, based on a p-median formulation, is suggested. This approach requires fewer cost estimates than the classical lot-sizing formulation.

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