Economic Lot Sizing: the Capacity Reservation Model

Capacity reservation contracts allow a consumer to purchase up to a certain capacity at a unit price lower than that of the spot market, while the consumer's excess orders are realized at the spot price. In this paper, we consider a lot sizing problem where the consumer places orders following a capacity reservation contract. In particular, we study the general problem and the polynomial time solvable special cases of the problem and propose corresponding algorithms for them. © 2013 Elsevier B.V. All rights reserved