Single Item Lot Sizing Problem under Renewable Energy Uncertainty

Abstract

Renewable energy sources play an important role to decrease the dependency to the traditional energy sources which are responsible for the high carbon emission levels in the world. The main challenge in the use of the renewable energy sources in the industrial sector, which has the highest energy consumption share among the others, is to plan the production considering the risk of discontinuity in the supply of the renewable energy sources due to their stochastic nature. In this paper, a single item lot sizing problem under uncertain renewable energy availability is addressed. The aim is to determine the optimal production plan and energy contract option which minimizes the total production and energy costs by guaranteeing to satisfy the external demand with a given service level. To do so, two types of chance constraints are introduced to cope with the stochastic availability of the renewable energy sources. The developed model is explained in detail and illustrative examples are presented and the findings are discussed briefly