Definition of a Decision Support Model for Calculating the Economic Production Lot Size

Abstract

This paper proposes a Decision Support System (DSS) for Calculating the Economic Production Lot Size. The focus is on the analysis of improvement of manufacturing productivity in the packaging industry, specifically in a metal packaging company. Through combining different SKUs (Stock Keeping Units) in the same production order, as opposed to the current single SKU orders production paradigm of, it is possible to increase the overall equipment effectiveness (OEE). This study identified the most critical OEE products within the company portfolio. One critical OEE was selected from within company’s strategic fitting process for the assessment of all relevant parameters set for the manufacturing process so that no product variant was disregarded. Evaluation of the improvement achieved by the new production paradigm was possible through a DSS tool developed to combine different SKUs in due production order, taking into account real data from customers’ orders. Following the tool development, it was possible to proceed with simulations for various review periods. As this study is an iterative process, the results obtained within each simulation enabled an improved definition for subsequent analysis focusing on the goal set - improving the OEE without increasing stock value. Finally, results were evaluated and the operational and economic benefits of combining different SKUs within the same production order were unequivocal, representing an OEE increase of 20% and a maximum decrease of 367,215€ in stock value.