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The Performance of MRP Purchase Lot‐Size Procedures Under Actual Multiple Purchase Discount Conditions
Author(s) -
Christoph Orinda Byrd,
LaForge R. Lawrence
Publication year - 1989
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.1540-5915.1989.tb01883.x
Subject(s) - vendor , sizing , order (exchange) , heuristic , purchase order , computer science , operations research , material requirements planning , business , purchasing , operations management , marketing , economics , production (economics) , microeconomics , mathematics , finance , art , artificial intelligence , visual arts
Several heuristic procedures for purchase lot sizing in material requirements planning (MRP) systems were tested with actual data from manufacturing companies. Information provided by the companies for each purchased item included the estimated requirements and costs, the price discount structure from the vendor, and the actual company ordering policy. Simulation tests for each purchased item involved comparisons of several purchase lot‐size procedures from the research literature along with the actual procedure used by the company providing the data. Results indicate that one of the heuristic lot‐size procedures from the literature consistently outperformed the company policies as well as all other models tested. Another noteworthy result is that, in some cases, the actual company order policy was more cost‐effective than some of the models from the research literature.