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In the two procedures described above, the costs resulting from stockkeeping, from the set up procedures or from purchasing have not been 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 optimized. These costs include lot size independent costs (setup or order costs) and storage costs.
In so doing, the following problem 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.
All optimum lot-sizing procedures adhere to the following pattern:
The starting point for lot sizing is the first material shortage date which is determined during the net requirements calculation. The order quantity must be larger or equal to the shortage quantity. The system then adds successive shortage quantities to this lot size until optimum costs have been established. This then determines the lot size.
The only differences between the various optimum lot-sizing procedures are the cost criteria. The following different procedures are available:
- Groff Reorder Procedure Optimum Lot-Sizing Procedu...
- Dynamic Lot Size Creation Optimum Lot-Sizing Proce...
- Least Unit Cost Procedure Optimum Lot-Sizing Proce...
- Part Period Procedure Optimum Lot-Sizing Procedure...
- Optimum Lot-Sizing Procedures System Functions in ...
- Period Lot-Sizing Procedures System Functions in a...
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