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A comparison of MRP lot sizing methods considering capacity change costs
Author(s) -
Collier David A.
Publication year - 1980
Publication title -
journal of operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.649
H-Index - 191
eISSN - 1873-1317
pISSN - 0272-6963
DOI - 10.1016/0272-6963(80)90008-x
Subject(s) - sizing , capacity management , capacity planning , material requirements planning , computer science , work (physics) , order (exchange) , operations research , carrying capacity , operations management , carrying cost , selection (genetic algorithm) , total cost , business , production (economics) , economics , mathematics , microeconomics , engineering , mechanical engineering , art , computer network , ecology , accounting , finance , artificial intelligence , visual arts , biology , operating system
Capacity management is the planning and leveling of resources required (load) against the resources available (capacity). In this study, the lot size models used by Material Requirements Planning (MRP) had a major effect on the work center load profiles generated by Capacity Requirements Planning (CRP). Therefore, the selection of lot size models for MRP systems is an important decision for capacity management as well as materials management. The results of this study highlight the operating characteristics of specific lot size models considering setup, inventory carrying, and capacity associated costs. For example, the Economic Order Quantity model and the Lot‐For‐Lot model in certain situations can help level load. The Periodic Order Quantity and Least Total Cost models especially for high cost structure ratios tend to result in erratic and lumpy work center load profiles. The reasons for such operating behavior are examined. Other concepts and relationships important to capacity management are discussed.