Stochastic hill climbing for dynamic lot sizing problem with returns and hybrids

This paper proposes two variants of stochastic hill climbing (SHC) for dynamic lot sizing problem with returns and hybrids (DLSPRH). The DLSPRH studies a hybrid system with manufacturing and remanufacturing with three types of the same product, where returns are considered at the component level. In the system, there are two separate production lines, one for production of new products and the other for remanufacturing of returned products. Hybrid products are processed on both lines consecutively since they are made out of both new material and returned components. While new and remanufactured products are sold in segmented markets, hybrids are used to fulfill excess new item demand. Since DLSPRH is a mixed-integer nonlinear programing (MINLP) problem, which is hard to solve and the hybrid system considered is a complex system, heuristic approaches have been resorted to, to find a near optimal solution. The two variants of SHC, ordered stochastic hill climbing (OSHC) and random stochastic hill climbing (RSHC), are presented.