A Heuristic for Multi-item Production with Seasonal Demand

A Heuristic for Multi-item Production with Seasonal Demand
Author(s): Metters, Richard and Ketzenberg, Michael and Semple, John
Year: 2001
Paper Number: GBS-DIA-2001-004
Goizueta Department: Decision and Information Analysis

Abstract

A heuristic is developed for a common production/inventory problem: multiple products with stochastic, seasonal demand, lost sales, and a constraint on overall production. Heuristics are needed since the calculation of optimal policies is impossible for real world problems. The proposed heuristic is compared with those in current use as well as exact optimal solutions under a variety of conditions. The proposed heuristic is near optimal, deviating from optimality by an average of 1.7% over a two-product experimental design, compared with existing practitioner heuristics, which deviated from optimality by an averages ranging from 4.5 to 10.6%.