abstract
develops a polynomial algorithm for obtaining dynamic economic lot sizes in
a single product multi period production system with the objective of minimizing total
production and inventory costs over T periods.It is assumed that production costs are
linear,inventory costs are concave,setup costs are zero and backlogging is not permitted
in all periods.Moreover,the unit production cost is a stochasticvariable,which is
evolved according to a continuous-time Markov process over the planning horizon.The
model is formulated as a stochastic dynamic programming(DP) optimization with the
state variable being unit production cost.Then,it is solved using the backward dynamic
programming approach.To justify the application of the proposed model,two practical
cases are presented.