Production and Inventory Management with Substitutions (Lecture Notes in Economics and Mathematical Systems Book 636)

"This book addresses production and inventory management problems where products can be replaced by specified substitutes. Depending on the considered application, substitutions can potentially improve the service level, reduce required safety stocks and total setup costs and times, utilize cost variations of input products, and reduce the amount of wastage. The main focus is the development of graphical modeling approaches for substitution options and of production planning models based on these approaches using mathematical programming. In addition to single-level dynamic lot-sizing models with substitutions, models for multi-level production systems with flexible bills-of-materials and recipes are devised. Also, a simulation-based optimization approach for a multi-location inventory system with substitutions is developed"--P. [4] of cover. Read more... Quantitativeapproachesforsolvingproductionplanningandinventorymanagement problems in industry have gained growing importance in the past years. Due to the increasinguse of AdvancedPlanningSystems, a widespreadpracticalapplicationof the sophisticated optimization models and algorithms developed by the Production Management and Operations Research community now seem within reach. The possibility that productscan be replaced by certain substitute productsexists in various application areas of production planning and inventory management. Substitutions can be useful for a number of reasons, among others to circ- vent production and supply bottlenecks and disruptions, increase the service level, reduce setup costs and times, and lower inventories and thereby decrease ca- tal lockup. Considering the current trend in industry towards shorter product life cycles and greater product variety, the importance of substitutions appears likely to grow. Closely related to substitutions are ?exible bills-of-materials and recipes in multi-level production systems. However, so far, the aspect of substitutions has not attracted much attention in academic literature. Existing lot-sizing models matching complex requirements of industrial optimization problems (e.g., constrained capacities, sequence-dependent setups, multiple resources) such as the Capacitated Lot-Sizing Problem with Sequence-Dependent Setups (CLSD) and the General Lot-Sizing and Scheduling Problem for Multiple Production Stages (GLSPMS) do not feature in substitution options. "This book addresses production and inventory management problems where products can be replaced by specified substitutes. Depending on the considered application, substitutions can potentially improve the service level, reduce required safety stocks and total setup costs and times, utilize cost variations of input products, and reduce the amount of wastage. The main focus is the development of graphical modeling approaches for substitution options and of production planning models based on these approaches using mathematical programming. In addition to single-level dynamic lot-sizing models with substitutions, models for multi-level production systems with flexible bills-of-materials and recipes are devised. Also, a simulation-based optimization approach for a multi-location inventory system with substitutions is developed"--Page 4 of cover Front Matter....Pages i-xx Introduction....Pages 1-8 Production and Operations Management: Models and Algorithms....Pages 9-79 Graphical Modeling of Substitutions and Flexible Bills-of-Materials....Pages 81-109 Literature Review....Pages 111-124 Efficient Reformulations for Uncapacitated and Capacitated Lot-Sizing with Substitutions and Initial Inventories....Pages 125-150 MIP-Based Heuristics for Capacitated Lot-Sizing with Sequence-Dependent Setups and Substitutions....Pages 151-183 Multi-Level Lot-Sizing Models with Flexible Bills-of-Materials....Pages 185-204 Blood Bank Inventory Control with Transshipments and Substitutions....Pages 205-226 Conclusions and Future Research....Pages 227-231 Back Matter....Pages 233-258 Production and operations management: models and algorithms Graphical modeling of substitutions and flexible bills-of-materials Literature review Efficient reformulations for uncapacitated and capacitated lot-sizing with substitutions and initial inventories MIP-based heuristics for capacitated lot-sizing with sequence-dependent setups and substitutions 7. Multi-level lot-sizing models with flexible bills-of-materials 8. Blood inventory control with transshipments and substitutions Conclusions and future research. This book addresses production and inventory management problems where products can be replaced by specified substitutes. It examines the development of graphical modeling approaches for substitution options and production planning models.