Properties of lot-sizing rules under lumpy demand

When a lot-sizing problem is viewed from a context of buyer-supplier relationships, an important phenomenon frequently encountered by the supplier is a so-called lumpy demand. However, there has been very little attention devoted to study the behaviour and performances of lot-sizing rules under the situation of lumpy demand. This paper presents both analytical and experimental studies of lot-sizing rules for lumpy demand situations. The analytical study is based on the assumption that constant demand occurs for every fixed number of periods. In the experimental study, both the quantity of and the time between demands are allowed to vary. The studies show that analytical results provide good insights in understanding the behaviour and performances of lot-sizing rules when more realistic situations are addressed in the experimental study. The paper also confirms that the results of lot-sizing studies under the situation of non-lumpy demand cannot be entirely generalised to the situation with lumpy demand. (C) 2002 Elsevier Science B.V. All rights reserved.