Stochastic multi-item lot sizing for the shareholder wealth maximisation

Abstract

The multi-item stochastic lot sizing issue is pivotal to batch manufacturing. Despite recent advances made in this field, the optimisation result is often rendered impractical, for little attention has been paid to corporate capital structures and the overall business goal—shareholder wealth maximisation. We attempt to address this issue by focusing on stochastic multi-item lot sizing for manufacturing in a complex yet realistic capital structure to realize the overall business objective. Our study considers an array of economical parameters for maximisation of the shareholder wealth, and also examines the impact of capital structure. Computational studies are presented to demonstrate the important implications of our proposed model on gaining corporate wealth in a practical capital structure.