The development of planning horizon theory and the comparison of decision/forecast horizons for dynamic lot size models

Abstract

PurposeThis paper seeks to examine the case of the multi‐period optimisation problem where decisions are obtained from a finite horizon model and will be implemented in a situation in which the system will operate indefinitely.Design/methodology/approachThe production planning problem is addressed in which the quantity of the product required (demand) in future periods is being forcast, from which one must decide when and how much to produce.FindingsFinds that a regeneration set is key for finding forecast horizon (FH) and decision horizon (DH) in the dynamic lot size model (DLSM). A regeneration set contains the optimal regeneration points in some conceivable future horizon.Originality/valueThis paper extends the research on horizons which has accumulated in the literature over the last 40 years.