Multiproduct dynamic lot-sizing model with coordinated replenishments

In this article we consider a multiproduct dynamic lot-sizing model. In addition to a separate setup cost for each product ordered, a joint setup cost is incurred when at least one product is ordered. We formulate the model as a concave minimization problem over a compact polyhedral set and present a finite branch and bound algorithm for finding an optimal ordering schedule. Superiority of the branch and bound algorithm to the existing exact procedures is demonstrated. We report computational experience with problems whose dimensions render the existing procedures computationally infeasible.