A hybrid Lagrangian-simulated annealing-based heuristic for the parallel-machine capacitated lot-sizing and scheduling problem with sequence-dependent setup times

•The lot-sizing and scheduling problem with multiple constraints is formulated.•The primal problem is decomposed into simple subproblems by Lagrangian decomposition.•A hybrid Lagrangian-simulated annealing-based heuristic is proposed.•It outperforms other heuristic methods and meets practical requirement of the tested firm.

This paper examines the parallel-machine capacitated lot-sizing and scheduling problem with sequence-dependent setup times, time windows, machine eligibility and preference constraints. Such problems are quite common in the semiconductor manufacturing industry. In particular, this paper pays special attention to the chipset production in the semiconductor Assembly and Test Manufacturing (ATM) factory and constructs a Mixed Integer Programming (MIP) model for the problem. The primal problem is decomposed into a lot-sizing subproblem and a set of single-machine scheduling subproblems by Lagrangian decomposition. A Lagrangian-based heuristic algorithm, which incorporates the simulated annealing algorithm aimed at searching for a better solution during the feasibility construction stage, is proposed. Computational experiments show that the proposed hybrid algorithm outperforms other heuristic algorithms and meets the practical requirement for the tested ATM factory.