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THE PERFORMANCE OF A SIMPLE INCREMENTAL LOT‐SIZING RULE IN A MULTILEVEL INVENTORY ENVIRONMENT
Author(s) -
Veral Emre A.,
LaForge R. Lawrence
Publication year - 1985
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1985.tb01475.x
Subject(s) - heuristics , benchmark (surveying) , economic order quantity , simple (philosophy) , sizing , heuristic , computer science , inventory management , mathematical optimization , scale (ratio) , operations research , mathematics , operations management , engineering , art , supply chain , philosophy , physics , geodesy , epistemology , quantum mechanics , political science , law , visual arts , geography
A simple incremental cost approach to lot sizing was tested in a multilevel inventory environment. The incremental approach has not previously been tested in a large‐scale study involving multiple product‐structure levels. Using the Wagner‐Whitin (WW) algorithm as a benchmark, the simple incremental rule (IPPA) was compared to three heuristic procedures (LFL, EOQ, and POQ) frequently used in material requirements planning (MRP) lot‐sizing research. The incremental rule consistently generated lower total order/setup and carrying costs than the three heuristics across the 3,200 multilevel test situations examined. In many of the test situations, the incremental rule also outperformed the WW benchmark.