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An efficient reformulation of the multiechelon stochastic inventory system with uncertain demands
Author(s) -
Nyberg Axel,
Grossmann Ignacio E.,
Westerlund Tapio
Publication year - 2013
Publication title -
aiche journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.958
H-Index - 167
eISSN - 1547-5905
pISSN - 0001-1541
DOI - 10.1002/aic.13977
Subject(s) - mathematical optimization , scheme (mathematics) , piecewise linear function , stochastic programming , decomposition , integer programming , benders' decomposition , piecewise , mathematics , linear programming , integer (computer science) , decomposition method (queueing theory) , computer science , discrete mathematics , geometry , mathematical analysis , ecology , biology , programming language
Significance It is shown that by reformulating the three‐stage multiechelon inventory system with specific exact linearizations, larger problems can be solved directly with mixed‐integer linear programming ( MILP ) without decomposition. The new formulation is significantly smaller in the number of continuous variables and constraints. An MILP underestimation of the problem can be solved as part of a sequential piecewise approximation scheme to solve the problem within a desired optimality gap.