Required setup reductions in JIT driven MRP systems

Abstract

Abstract Successful implementation of Just-in-time (JIT) production requires the frequent placement of small orders and the minimization of work-in-process (WIP) inventory levels. Successful JIT implementation requires the reduction of setup (order)costs to near zero levels. Recognizing that such reductions are not always attainable in practice, the authors have executed software that simulates the operation of Materials Requirements Planning (MRP) lot sizing methods. Using actual data, 9,800 simulation runs were performed. Our goal has been to determine the level of setup/order cost reduction to successfully implement JIT production ordering methods in an MRP environment.