Background:
Lotsizing (or batching) in material requirements planning (MRP) is theprocess of modifying the net requirement quantities before they aretranslated into planned order receipts and in turn planned ordersreleases in an MRP system.
1. The net requirements data is subjected to lot sizingrequirements within MRP.
See AlsoPeriod Lot-Sizing ProcedureHow do you optimize lot sizing in MRP calculations?Lot Size PlanningLot Size in Options Trading - How is it Fixed for Options & Futures2. Lot sizing is basically onemethod of converting requirements into a series ofreplenishment/purchase orders
5. Lot sizing is generallyconsidered in a local level; that is, only in terms of the one part andnot its components.
Ifnet requirements were translated directly into planned orders, it wouldresult in manufacturing component schedules and purchasing schedulesthat did not take any account of the cost of machine setups or the costof ordering. In other words, making the requirements as they occur on aperiod‐by‐period basis, otherwise known as the lot‐for‐lot policy, maycertainly reduce overall stockholding costs, depending on the size ofplanning period chosen, but may increase costs incurred throughexcessive setup and ordering activities for small batches.
Questions for Thought:
1. Think abouteveryday lot sizes that you experience in your life (e.g., a six packof soda)? Name a few.2. How can odd lotsizes drive up inventory costs?
3. Theclip from I'm Gonna Get You Sucka is funny but in a restaurant is itpossible to order lot for lot (i.e., 1 rib)? What is it called?
