A stochastic profit-maximising economic lot scheduling problem with price optimisation

A stochastic version of the economic lot sizing problem with pricing is presented. The control variables of the stochastic problem are the production quantities and cycle lengths for each product. The recourse variables are the sales prices and the external purchase quantities in each production cycle. A solution method based on simulation, decomposition, and column generation is proposed and tested using a number of designed experiments. The method is found to produce very close to optimal solutions quickly. [Received 29 January 2011; Revised 6 February 2011; Revised 21 March 2012; Accepted 3 October 2012]