The paper addresses a multi-item, multi-plant lot-sizing problem with transfer costs andcapacity constraints. The problem is reformulated according to a multi-commodity flowformalism, and decomposed, through Lagrangean relaxation, into a master facility locationproblem and a slave minimal cost multi-commodity flow problem. The decomposition frameworkgives rise in a natural way to designing a Lagrangean based heuristic. Numericalexperiments showing the efficiency of the proposed approach are reported.
