A Novel Approach to Cost Estimation in Lot Sizing with Uncertain Lead Times

The lot sizing problem involves meeting the demand of the clients of a given retailer by placing orders with different suppliers. Decision-making models were developed to minimize the retailer’s total cost while considering their retailers’ different characteristics, such as their capacities, prices, and lead times. However, when integrating uncertainty into the environment, this challenging problem becomes even more complex, and the exact methods developed need extremely long computational time to go over all the possible scenarios. This paper proposed a novel formulation to minimize the operations needed when finding the optimal solution to the lot sizing problem under uncertain lead times.