Economic Lot-Sizing for Integrated Production and Transportation

In this study, improved and new algorithms are developed for economic lot-sizing problems with integrated production and transportation operations. To model the economies of scale in production with the effect of shipment consolidation in transportation, we assume concave production costs and stepwise transportation costs. More specifically, we consider concave/fixed-charge/nonspeculative cost functions in production, and nonstationary/stationary delivery cost functions in transportation. The cost functions in production are always assumed to be nonstationary. To achieve a cost-effective production and shipment schedule over time, inventories are considered for carrying and backlogging items. Efficient solution procedures are provided for all the models with or without backlogging under assumed cost structures.