Interactive Multiobjective Optimization in Lot Sizing with Safety Stock and Safety Lead Time

Abstract

In this paper, we integrate a lot sizing problem with the problem of determining optimal values of safety stock and safety lead time. We propose a probability of product availability formula to assess the quality of safety lead time and a multiobjective optimization model as an integrated lot sizing problem. In the proposed model, we optimize six objectives simultaneously: minimizing purchasing cost, ordering cost, holding cost and, at the same time, maximizing cycle service level, probability of product availability and inventory turnover. To present the applicability of the proposed model, we consider a real case study with data from a manufacturing company and apply the interactive NAUTILUS Navigator method to support the decision maker from the company to find his most preferred solution. In this way, we demonstrate how the decision maker navigates without having to trade-off among the conflicting objectives and could find a solution that reflects his preference well.