This book addresses production and inventory management problems where products can be replaced by specified substitutes. Depending on the considered application, substitutions can potentially improve the service level, reduce required safety stocks and total setup costs and times, utilize cost variations of input products, and reduce the amount of wastage. The main focus is the development of graphical modeling approaches for substitution options and of production planning models based on these approaches using mathematical programming. In addition to single-level dynamic lot-sizing models with substitutions, models for multi-level production systems with flexible bills-of-materials and recipes are devised. Also, a simulation-based optimization approach for a multi-location inventory system with substitutions is developed.
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