Heuristic Procedures for Multi-Item Inventory Planning with Limited Storage

Abstract
The determination of replenishment quantities for multiple products with dynamic demand, subject to storage constraints, is addressed. A lower bound is obtained by solving the dual problem. Both subgradient optimization of the Lagrangean relaxation and LP relaxation of the convexified solution space are considered. Dantzig-Wolfe decomposition is used to solve the LP relaxation. A heuristic is proposed for the generation of feasible solutions obtained by modifying solutions created at each step of either subgradient optimization or Dantzig-Wolfe decomposition. An experimental investigation of 428 test problems indicates that the heuristic coupled with sub-gradient optimization gives consistently good solutions.