Neighbourhood search meta-heuristics for capacitated lot-sizing with sequence-dependent setups

We address a problem that often arises in industry, the multi-item capacitated-lot-sizing and scheduling problem with sequence-dependent setup times and costs. Powerful commercial solvers fail to solve even medium-sized instances of this NP-hard problem, therefore we employ a tabu search and a variable neighbourhood search meta-heuristic to solve it and compare the performance of these metaheuristics over time. In contrast to the majority of the literature on this topic, the solution representation explicitly considers production quantities and setup variables, which enables us to develop fast search heuristics. A comprehensive set of computational experiments shows the effectiveness and efficiency of the proposed approaches in solving medium-to large-sized problems.