Abstract
The dynamic lot-sizing problem arises in a variety of problem contexts including inventory and supply chain management, but the capacitated problems are generally, NP hard, i.e., difficult to solve to optimality. Here we show how stronger formulations of the problem with production cost and setup time, are obtained by introducing the auxiliary variables via dynamic programming and the derived shortest path formulations. Our computational experiments indicate that our reformulations are capable of solving quite large problem instances within a. reasonable amount of time.
