Dynamic production scheduling of single product with backlogging or lost-sales

Abstract

Two production scheduling models with concave costs are considered; backlogging case and lost-sales case. There are constraints on production and inventory level in each period. The structure of the optimal schedule for backlogging case has been studied, while we extend it to lost-sales case. Efficient Backward dynamic programming algorithms are developed for both cases. Both algorithms are also tested and appeared more favorable in comparison with others developed based on the so-called shortest-route network method.