Combining the principles of variable neighborhood decomposition search and the fix&optimize heuristic to solve multi-level lot-sizing and scheduling problems

In this paper a new heuristic is proposed to solve general multi-level lot-sizing and scheduling problems. The idea is to cross-fertilize the principles of the meta-heuristic Variable Neighborhood Decomposition Search (VNDS) with those of the MIP-based Fix&Optimize heuristic. This combination will make it possible to solve the kind of problems that typically arise in the consumer goods industry due to sequence-dependent setups and shifting bottlenecks. In order to demonstrate the strength of this procedure, a GLSP variant for multiple production stages is chosen as a representative. With the help of artificial and real-world instances, the quality of the solution as well as the computational performance of the new procedure is tested and compared to a standard MIP-solver.