A re-examination of lot sizing procedures for requirements planning systems: some modified rules

Abstract

Several lot sizing procedures for determining order points and order quantities have received attention in the literature. A few of these are as follows: Economic Order Quantity, Least Total Cost, Periodic Order Quantity, Lot for Lot, Part-Period Balancing, Silver-Meal algorithm, and the Wagner-Whitin algorithm. While some of the above procedures are relatively easy to compute (Economic Order Quantity, Least Total Cost, Periodic Order Quantity, Lot for Lot, etc.), others have experienced limited use in practice because of their computational complexities (e.g. Wagner-Whitin and Silver-Meal algorithms). This paper presents two lot sizing procedures that are easy to use. These two procedures are modifications of the Economic Order Quantity and the Least Total Cost, and they dominate the corresponding technique from which they are derived. The performance of the new methods is compared to that of the original methods and the optimal solution