Lagrangian Relaxation and Fix Heuristic for Integrated Production Planning and Warehouse Storage Allocation Problem under Demand Uncertainty

Abstract

We consider an integrated optimization model for production planning and warehouse storage allocation under demand uncertainty. A deterministic problem of the integrated production planning and warehouse storage allocation problem is extended into a stochastic programming problem formulation. A Lagrangian relaxation and fix heuristic is proposed to solve the mixed integer nonlinear programming problem by decomposing the problem into single item capacitated lot sizing and warehouse storage allocation problems. The problem instances based on real data are solved in the numerical experiments. Computational results demonstrate the effectiveness of the proposed method.