A comparison of non-stationary stochastic lot-sizing strategies

Abstract: We consider the non-stationary stochastic lot sizing problem with backorder costs and make a cost comparison among different lot-sizing strategies. We initially provide an overview of the strategies and some corresponding solution approaches in the literature. We then compare the cost performances of the lot-sizing strategies on a common test bed while taking into account the added value of realized demand information. The results of this numerical experience enable us to derive novel insights about the cost performance of different stochastic lot-sizing strategies under re-planning with respect to demand realization.