A study of the total inventory cost as a function of the reorder interval of some lot-sizing techniques used in material requirements planning systems

This paper compares the total inventory costs (TIC) of five lot-sizing techniques. The add-drop heuristic (ADH) is a capacitated technique and the lot-for-lot (L4L), fixed period quantity (FPQ), least unit cost (LUC) and the silver-meal heuristic (SMH) are uncapacitated techniques. The TIC is consid...

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Bibliographic Details
Published inComputers & industrial engineering Vol. 40; no. 1; pp. 101 - 116
Main Authors Sánchez, S.N, Triantaphyllou, E, Webster, D.B, Liao, T.W
Format Journal Article
LanguageEnglish
Published Seoul Elsevier Ltd 01.06.2001
Oxford Pergamon Press
New York, NY Pergamon Press Inc
Subjects
Applied sciences
Exact sciences and technology
Heuristic
Inventory control
Inventory control, production control. Distribution
Lot-sizing techniques
Material requirements planning
MRP lot-sizing techniques
Operational research and scientific management
Operational research. Management science
Reorder interval
Studies
Total inventory cost
Lot-sizing techniques
MRP lot-sizing techniques
Reorder interval
Total inventory cost
Performance evaluation
Minimum time
Fixed cost
Heuristic method
Cost function
Lot sizing
Planning
Titanium carbide
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Summary:This paper compares the total inventory costs (TIC) of five lot-sizing techniques. The add-drop heuristic (ADH) is a capacitated technique and the lot-for-lot (L4L), fixed period quantity (FPQ), least unit cost (LUC) and the silver-meal heuristic (SMH) are uncapacitated techniques. The TIC is considered as a function of the reorder interval (RI). This comparison is based on the assumption that if both capacitated and uncapacitated techniques produce identical RIs, then their TICs must also be identical (although uncapacitated techniques do not reflect this fact). Empirical results suggest that the ADH technique yields considerably better (i.e. lower) TICs when the demand levels and the number of items are low. On the other hand, these results suggest that for high demand levels, the TICs of the four popular lot-sizing techniques are close to the near optimal cost obtained by the (most time-consuming) ADH technique. Some theoretical results on the performance of uncapacitated techniques are also presented.
ISSN:0360-8352
1879-0550
DOI:10.1016/S0360-8352(00)00079-6