Multi-item order quantity optimization through stochastic goal programing

Abstract

AbstractManaging multi-item economic order quantity (MIEOQ) problems within an uncertain business environment is a critical challenge. Decision-makers, with a comprehensive understanding of organizational goals and risk tolerances, play a pivotal role in this context. However, existing solutions often inadequately consider decision-maker preferences in MIEOQ problem-solving. The literature suggests that integrating the concept of satisfaction function with stochastic goal programming (SGP) can address this issue. However, the existing SGP approaches struggle with the challenge of effective goal setting. Additionally, employing distinct satisfaction functions for each uncertain goal can complicate threshold setting, diminishing their effectiveness. To tackle these challenges, we introduce a straightforward, yet effective approach called aspiration-free goal programming (AFGP) and integrate it with a unified satisfaction function. AFGP operates by minimizing expected values of deviation variables, eliminating the challenging task of goal setting under uncertainty. A unified satisfaction function is a singular metric applied uniformly across multiple goals, offering a consistent framework for evaluating performance across diverse objectives. This integration forms a preference-sensitive framework that not only captures nuanced trade-offs between conflicting objectives but also enhances decision quality and stakeholder satisfaction. By emphasizing the importance of decision-maker’s preferences and addressing identified issues, our research introduces a practical and effective approach for achieving balanced solutions in uncertain MIEOQ environments.