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Chapter 6 Lot-Sizing Procedures
Static lot-sizing procedures
Period lot-sizing procedures
Optimum lot-sizing procedures
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Chapter 6 Objectives
you will know the lot-sizing procedures available in
the R/ System and the options you have !or detailed
control
"y the end o! this chapter#
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Lot-Sizing Procedures# Overview
Static Static
procedures procedures
Lot-!or-lot order $uantity
Replenishment up to
ma%imum stock level
&i%ed lot size
Period Period
procedures procedures
'aily lot size
(onthly lot size
)eekly lot size
Planning calendar
Optimum Optimum
procedures procedures
Least unit cost procedure
Part period procedure
*ro!! reorder procedure
Lot-sizing procedures Lot-sizing procedures
'ynamic +ost Planning
When maintaining the material master record, you can define additional restrictions for the lot-sizing
procedure:
minimum lot size
maximum lot size
rounding value
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Static Lot-Sizing Procedures
,uantity
-.me
Lot-!or-lot order $uantity
Replenishment up to
ma%imum stock level
&i%ed lot size
Receipts
.ssues
In static lot-sizing procedures, future shortages are not taken into account, that is, if a shortage exists, an order
proposal is created for the amount defined for the static lot size. The system does not check to see when a future
shortage exists.
If you select the lot-for-lot order uantity, an order proposal is created for the shortage uantity. If several issues
exist on one day that cannot !e covered, the system still only creates one order proposal covering the total
shortage uantity on this particular day.
If you select the fixed lot size, the system creates an order proposal for the fixed lot size if a material shortage
occurs. If this is not sufficient to cover the shortage uantity, then the system creates several order proposals for
the same date until the shortage is covered.
If you select replenishment up to maximum stock level, when a material shortage occurs, the system creates an
order proposal for the amount reuired to !ring the stock level up to the maximum stock level recorded in the
material master record.
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Period Lot-Sizing Procedures
,uantity
-ime
Period length Period length
Receipts
.ssues
In period lot-sizing procedures, reuirements that lie within the predefined period lengths are grouped together
into one lot.
The period length is !ased on the gregorian calendar "day, week, month# where!y the num!er of periods can !e
determined additionally.
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Paris
Paris
Lot Size /ccording to Planning +alendar
(O -0 )1 -2 &R S/ S0
3
4
35
63
64
6
7
38
66
67

39
3:
6
9
;
33
34
6;
3
5
36
37
65
8
3
69
68
:
3;
63
6:
/ugust 3778
"erlin
"erlin
$ou can use the planning calendar to detemine period lengths of your choice.
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Optimum Lot-Sizing Procedures
/ lot o! deliveries/
2igh order costs
(inimal stockkeeping/
(inimal storage costs
&ew deliveries /
Low order costs
(ore e%tensive stockkeeping/
2igher storage costs
%ptimum lot-sizing procedures optimize the total costs incurred for order costs and storage costs.
The principle of the optimum lot-sizing procedure is to keep grouping reuirements together into one lot until
the total costs are optimized - using various cost criteria.
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Part Period "alancing
Re$mts % Price % Storage costs <age % Storage time
)arehse costs =
399 % 85
Price # 69 >
Lot size !i%ed costs# 399 >
Storage costs percentage # 39 <
Re$mts date Re$mts
$uantity
Lot size &i%ed
costs
Storage
costs
-otal storage
costs
9:?98?377; 3999 3999 399 9 9
9:?3?377; 3999 6999 4?8 4?8
9:?69?377; 3999 999 :8?:3 335?9:
9:?6:?377; 3999 ;999 335?9: 374?:4
Optimum
&earching for point of intersection.
'euirements grouped together into one lot until the total warehouse costs exceed the lot size fixed costs.
In this example, the optimum lot size is ())) pieces as if the lot size is set to *))) pieces, the total
warehouse costs "++,.)-# would !e greater than the lot size fixed costs "+))#.
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Least 0nit +ost Procedure
Re$mts % Price % Storage costs <age % Storage time
)arehse costs =
399 % 85
Price # 69 >
Lot size !i%ed costs# 399 >
Storage costs percentage # 39 <
Re$mts date Re$mts
$uantity
Lot size &i%ed
costs
Storage
costs
-otal
costs
0nit
costs
9:?98?377; 3999 3999 399 9 399 9?39
9:?3?377; 3999 6999 4?8 34?8 9?9:
9:?69?377; 3999 999 :8?:3 635?9: 9?33
9:69:?377; 3999 ;999 335?9: 9?3; 9?94
Optimum
&earch for minimum.
'euirements are grouped into one lot until the total costs per unit reach a minimum level.
The optimum lot size in this example is ())) pieces as here the minimum cost per unit ").)-# is achieved.
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*ro!! Reorder Procedure
Re$mts % Price % Storage costs <age
/dditional storage costs =
399 % 85 % 6
Lot size !i%ed costs
Saving on ordering costs =
Storage time % @Storage time A 3B
Price # 69 '(
Lot size !i%ed costs # 399 '(
Storage costs percentage # 39 <
Re$mts date Re$mts
$uantity
Lot size &i%ed
costs
Saving on
ordering costs
/dditional
storage costs
9:?98?377; 3999 3999 399 9 9
9:?3?377; 3999 6999 3?:7 6?:;
9:?69?377; 3999 999
9:?6:?377; 3999 ;999
Optimum
&earch for increase.
'euirements are grouped into one lot until the additional storage costs per period are greater than the
savings on ordering costs per period.
In this example, the optimum lot size is +))) pieces as if one more reuirement is added, the additional
storage costs "(.-.# are greater than the saving on ordering costs "+.-/#.
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'ynamic Lot Size +reation
Re$mts % Price % Storage costs <age % Storage time
Storage costs =
399 % 85
Price # 69 >
Lot size !i%ed costs# 399 >
Storage costs percentage # 39 <
Re$mts date Re$mts
$uantity
Lot size &i%ed
costs
Storage costs
9:?98?377; 3999 3999 399 9
9:?3?377; 3999 6999 4?8
9:?69?377; 3999 999 :8?:3
9:?6:?377; 3999 ;999 335?9:
Optimum
'emts are grouped into one lot until the additional storage costs are less than the lot size fixed costs.
The additional storage costs are greater than the lot size fixed costs with a lot size of .))) pieces.
Therefore, the optimum lot size is *))) pieces.
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Chapter 6 Review
.n the static proceduresC !uture shortages are not taken
into account? -hese procedures are based on each
shortage?
-he !i%ed order $uantity or the procedure entitledC
Dreplenishment up to ma%imum stock levelE are both
recommended !or reorder point planning?
.n the period lot-sizing proceduresC re$uirements within a
prede!ined period are grouped together#
- Period according to the gregorian calendar
- Period according to the planning calendar
.n optimum proceduresC the system optimizes the sum o!
order costs and storage costs?