Optimum Lot-Sizing Procedures 

Use

In static and period lot-sizing procedures, the costs resulting from stockkeeping, from the setup procedures or from purchasing are not taken into consideration. The aim of optimum lot-sizing procedures, on the other hand, is to group shortages together in such a way that costs are minimized. These costs include lot size independent costs (setup or order costs) and storage costs.

Taking Purchasing as an example, the following problem hereby arises:

If you order often, you will have low storage costs but high order costs due to the high number of orders. If you only seldom place orders then you will find that your order costs remain very low, but your storage costs will be very high since warehouse stock must be large enough to cover requirements for a much longer period.

Features

The starting point for lot sizing is the first material shortage date that is determined during the net requirements calculation. The shortage quantity determined here represents the minimum order quantity. The system then adds successive shortage quantities to this lot size until, by means of the particular cost criterion, optimum costs have been established.

The only differences between the various optimum lot-sizing procedures are the cost criteria. The following procedures are available: