A relative benefit algorithm for basic economic lot size problem

Abstract The paper develops an algorithm that solves economic lot size problem in O ( n 2 ) time in the Wagner-Whitin case. The algorithm is based on the standard dynamic programming approach which requires the computation of the maximal relative benefit for some possible subplans of the production plan. In this algorithm the authors have studied the forward property and decomposition properties which can make computation easy. The proposed algorithm appears to perform quite reasonably for practical application.