Lot Sizing in MRP Systems Operations Management Assignment Help

Lot Sizing in MRP Systems

The determination of lot sizes in an MRP system is a complicated and difficult problem. Lot sizes are the part quantities issued in the planned order receipt and planned order release sections of an MRP schedule. For parts produced in house. lot sizes are the production quantities or batch sizes. For purchased parts. these are the quantities ordered from the supplier. Lot sizes generally meet part requirements for one or more periods. Most lot-sizing techniques deal with how to balance the setup or order costs and holding costs associated with meeting the net requirements generated by the MRP planning process. Many MRP systems have options for computing lot sizes based on some of the more commonly used techniques. It should be obvious, though. that the use of lot-sizing techniques increases the complexity in generating MRP schedules. When fully exploded, the number of parts scheduled can be enormousThere are four lot-sizing techniques that are commonly used with MRP systems:  (a) lot-for-lot (L4L), (b) economic order quantity (EOQ). (e) least total cost (LTC), and(d) least unit cost (LUC). Lot-for-lot (L4L) is the most common technique; it

• Sets planned orders to exactly match the net requirements.
• Produces exactly what is needed each period with none carried over into future periods. .
• Minimizes carrying cost.
• Does not take into account setup costs or capacity limitations.

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