A strong cutting plane algorithm for production scheduling with changeover costs
Operations Research
Existence of forecast horizons in undiscounted discrete-time lot size models
Operations Research
A theory of rolling horizon decision making
Annals of Operations Research
Heuristic algorithms for lotsize scheduling with application in the tobacco industry
Computers and Industrial Engineering
Single-Period Multiproduct Inventory Models with Substitution
Operations Research
Management of Multi-Item Retail Inventory Systems with Demand Substitution
Operations Research
Manufacturing & Service Operations Management
Stocking Retail Assortments Under Dynamic Consumer Substitution
Operations Research
Manufacturing & Service Operations Management
A Two-Location Inventory Model with Transshipment and Local Decision Making
Management Science
Dynamic Economic Lot Size Model with Perishable Inventory
Management Science
A New Decision Rule for Lateral Transshipments in Inventory Systems
Management Science
Production Planning by Mixed Integer Programming (Springer Series in Operations Research and Financial Engineering)
Dynamic Lot Sizing with Batch Ordering and Truckload Discounts
Operations Research
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This paper analyzes the trade-off between (demand) substitution costs and (production) changeover costs in a discrete-time production-inventory setting using a two-product dynamic lot-sizing model with changeover, inventory carrying, and substitution costs. We first show that the problem is polynomially solvable and then develop several insights into the behavior of such systems and identify strategies for effectively managing them. A key driver for the extent of substitution is the ratio of changeover cost to the substitution cost associated with mean demand. The interaction between changeovers and substitution is most prominent when this ratio is neither too high nor too low. Furthermore, the value of this ratio also influences the length of an appropriate rolling horizon; an increase in the value of the ratio signals an increase in the length of a near-optimal rolling horizon. We identify a complementary relationship between substitution and changeover costs: When the changeover cost is large, it is better to invest in reducing the substitution cost and vice versa. As the holding cost of the substitutable product increases, substitution is (respectively, changeovers are) utilized more when the changeover (respectively, substitution) cost is large.