Lot Size Optimization of Purchased Products
In Turkey, Pınar Et is one of the leading companies in meat sector since 1985. Within the scope of senior year project, this paper considers the optimization of lot sizes of auxiliary and packaging materials, purchased by the company. Aim of the study is the minimization of total inventory costs, which include unit purchasing, setup, and holding costs subject to a service level. For this purpose, multi-item dynamic lot sizing models are formulated with time-varying demand, deterministic lead time, with backorders allowed. The first model is formulated by considering Joint Replenishment of items supplied from the same suppliers. The second model is formulated to reflect Vendor-Based minimum lot sizes and rounding quantities to the replenishment quantity. Although these models produce an optimal solution in a reasonable time, a Wagner-Whitin based heuristic algorithm is developed as an additional solution to the company. All of the models run according to Rolling Horizon (RH) approach, which updates the existing plan at the beginning of each planning period in order to cope with changes in demand and other parameters. As a result of the study, potential savings in holding cost and reduction in planning duration are obtained and are reported.
KeywordsMulti-item dynamic lot sizing Wagner-Whitin algorithm Minimum order size Joint replenishment Rolling horizon
This study is supported by The Scientific and Technological Research Council of Turkey (TUBITAK) in the program of “2209-B Undergraduate Research Projects for Industrial Applications Fellowship Program”. We would like to express our special appreciation and thanks to our advisors at Yaşar University; especially Dr. Onder Bulut for assisting this difficult study, with constructive comments that greatly improved the paper. Also we would like to acknowledge the studied company Pınar Et for their cooperation and providing necessary data during this educational process.
- 8.Backorder Costs: Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail. https://investinganswers.com/financial-dictionary/businesses-corporations/backorder-costs-4856