Economic lot sizing with constant capacities and concave inventory costs

This article studies the classical single-item economic lot-sizing problem with constant capacities, fixed-plus-linear order costs, and concave inventory costs, where backlogging is allowed. We propose an O(T3) optimal algorithm for the problem, which improves upon the O(T4) running time of the famous algorithm developed by Florian and Klein (Manage Sci18 (1971) 1220). Instead of using the standard dynamic programming approach by predetermining the minimal cost for every possible subplan, we develop a backward dynamic programming algorithm to obtain a more efficient implementation. (c) 2012 Wiley Periodicals, Inc. Naval Research Logistics, 2012