A heuristic for multi-item production with seasonal demand |
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| Authors: | Michael Ketzenberg Richard Metters John Semple |
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| Affiliation: |
a College of Business, Colorado State University, Ft. Collins, CO, USA
b Goizueta Business School, Emory University, Atlanta, GA, USA
c Cox School of Business, Southern Methodist University, Dallas, TX, USA |
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| Abstract: | A heuristic is developed for a common production/inventory problem characterized by multiple products, stochastic seasonal demand, lost sales, and a constraint on overall production. Heuristics are needed since the calculation of optimal policies is impractical for real-world instances of this problem. The proposed heuristic is compared with those in current use as well as optimal solutions under a variety of conditions. The proposed heuristic is both near optimal and superior to existing heuristics. The heuristic deviated from optimality by an average of 1.7% in testing using dynamic programming as a benchmark. This compares favorably against linear-programming-based heuristics and practitioner heuristics, which deviated from optimality by 4.5 to 10.6%. |
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