Determination of Supplier and Lot Size with Heuristics Methods Based On Dynamic Programming and Wagner-Whitin Algorithm

Abstract

For any companies, sufficient stock level is an important factor for production process. A company must determinate optimal inventory policy based on lot sizing technique because of dilematic problem of inventory (surplus and deficit). Lot Sizing is a process of determinating the size of optimal order of any products. An extension of Lot sizing problem is a lot sizing problem considering multiple products and multiple suppliers in multi periods condition. Heuristics based on dynamic programming technique and Wagner-Whitin algorithm are presented to address the problem. From the analysis that we have done, it can be concluded that both heuristics have the same effectivity which are closed to optimum and about 1.77% difference with LINDO output.