A new approach to the dynamic lot size model

Abstract

This paper considers a T period planning problem for single stage in which a sequence of known demands D₁,…, D_T must be satisfied. An efficient calculation reducing theorem based on cost-path and a new recurrence relation is developed to find optimal policies. Several regeneration points can easily be obtained by comparing setup cost to holding cost. We also prove that the knots of a cost-path satisfy the necessary conditions of the Wagner-Whitin algorithm. The new concept could also be used to eliminate the number of additions in the optimal lot size problem for multi-stage assembly systems.