An Algorithm for the Dynamic Lot-Size Problem with Time-Varying Production Capacity Constraints

We consider the situation of a single item having a deterministic, time-varying demand pattern. Production lot sizes, so as to minimize the total of setup and carrying costs, are to be determined subject to production capacity restrictions that can vary with time. Two important theorems concerning properties of the optimal solution are exploited in developing a tree search algorithm. In addition, other properties are utilized to reduce the amount of search necessary. Results of extensive tests are presented and discussed.