Economic Lot-Sizing Problem with Remanufacturing Option: Complexity and Algorithms

In a single item dynamic lot-sizing problem, we are given a time horizon and demand for a single item in every time period. The problem seeks a solution that determines how much to produce and carry at each time period, so that we will incur the least amount of production and inventory cost. When the remanufacturing option is included, the input comprises of number of returned products at each time period that can be potentially remanufactured to satisfy the demands, where remanufacturing and inventory costs are applicable. For this problem, we first show that it cannot have a fully polynomial time approximation scheme (FPTAS). We then provide a pseudo-polynomial algorithm to solve the problem and show how this algorithm can be adapted to solve it in polynomial time, when we make certain realistic assumptions on the cost structure. We finally give a computational study for the capacitated version of the problem and provide some valid inequalities and computational results that indicate that they significantly improve the lower bound for a certain class of instances.