# Frontiers of Engineering Management

 Front. Eng    2020, Vol. 7 Issue (2) : 248-258     https://doi.org/10.1007/s42524-019-0069-5
 RESEARCH ARTICLE
Two-level uncapacitated lot-sizing problem considering the financing cost of working capital requirement
Yuan BIAN1(), David LEMOINE2, Thomas G. YEUNG2, Nathalie BOSTEL3
1. School of Economics and Management, University of Chinese Academy of Sciences, Beijing 100049, China
2. LS2N UMR CNRS 6004, IMT Atlantique, Nantes 44300, France
3. LS2N UMR CNRS 6004, University of Nantes, Saint-Nazaire 44606, France
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 Abstract During financial crisis, companies constantly need free cash flows to efficiently react to any uncertainty, thus ensuring solvency. Working capital requirement (WCR) has been recognized as a key factor for releasing tied up cash in companies. However, in literatures related to lot-sizing problem, WCR has only been studied in the single-level supply chain context. In this paper, we initially adopt WCR model for a multi-level case. A two-level (supplier–customer) model is established on the basis of the classic multi-level lot-sizing model integrated with WCR financing cost. To tackle this problem, we propose sequential and centralized approaches to solve the two-level case with a serial chain structure. The ZIO (Zero Inventory Ordering) property is further confirmed valid in both cases. This property allows us to establish a dynamic programming-based algorithm, which solves the problem in O(T4). Finally, numerical tests show differences in optimal plans obtained by both approaches and the influence of varying delays in payment on the WCR of both actors. Corresponding Author(s): Yuan BIAN Just Accepted Date: 17 December 2019   Online First Date: 17 January 2020    Issue Date: 27 May 2020
 Cite this article: Yuan BIAN,David LEMOINE,Thomas G. YEUNG, et al. Two-level uncapacitated lot-sizing problem considering the financing cost of working capital requirement[J]. Front. Eng, 2020, 7(2): 248-258. URL: http://journal.hep.com.cn/fem/EN/10.1007/s42524-019-0069-5 http://journal.hep.com.cn/fem/EN/Y2020/V7/I2/248