Evaluating the effectiveness of using lot-sizing rules to cope with MRP system nervousness

Abstract

Different lot-sizing algorithms lead to various lot sizes of planned orders in the materials requirements planning (MRP) schedule. With the 'built-in' protective stock of a majority of lot-sizing rules, small deviations in production schedules can be resolved by the extra inventories carried without modifying the due dates of open orders on the shop floor. Therefore, system nervousness in MRP systems can be reduced. The objective of this paper is to examine the effectiveness of using lotsizing rules to cope with MRP system nervousness under such operating environments as lead time uncertainty and demand variation by a simulation study. The results indicate that the conventional wisdom of using lot-for-lot at the end item level to reduce system nervousness works only in certain operating environments. It is found that such lot-sizing rules as part-period balancing and Silver-Meal algorithms perform well, in terms of total cost, and dampen system nervousness in most of the operating environments studied