Some new dynamic economic lot sizing models

We introduce a dynamic economic lot sizing problem which takes into account both the production setup cost and the designed-and-yet stretchable production capacity. Demands and the control on production activities drive the evolution of the production system. We give a pseudo-polynomial algorithm for the problem when future demands axe known. When there is uncertainty in future demands and there is no holding of inventory, we propose a two-layered solution process which makes the demand acceptance decision first and decides the level of production next. We also construct a mixed model which combines the features of both deterministic and stochastic models. The model not only utilizes currently-known information but also anticipates for the future. Our simulation study demonstrates the advantage of the mixed model.