Lot
sizing (or batching) in material requirements planning (MRP) is the
process of modifying the net requirement quantities before they are
translated into planned order receipts and in turn planned orders
releases in an MRP system.
1. The net requirements data is subjected to lot sizing
requirements within MRP.
2. Lot sizing is basically one
method of converting requirements into a series of
replenishment/purchase orders
5. Lot sizing is generally
considered in a local level; that is, only in terms of the one part and
not its components.
If
net requirements were translated directly into planned orders, it would
result in manufacturing component schedules and purchasing schedules
that did not take any account of the cost of machine setups or the cost
of ordering. In other words, making the requirements as they occur on a
period‐by‐period basis, otherwise known as the lot‐for‐lot policy, may
certainly reduce overall stockholding costs, depending on the size of
planning period chosen, but may increase costs incurred through
excessive setup and ordering activities for small batches.
Questions for Thought:
1. Think about
everyday lot sizes that you experience in your life (e.g., a six pack
of soda)? Name a few.
2. How can odd lot
sizes drive up inventory costs?
3. The
clip from The Father of the Brid is funny but what can be done when
items that "go together"and/or must be assembled together have lot
sizes that are mismatched? What possible effects can lot size mismatches have on inventory management?