11-MRP_II (1) - MRP Part II technical issues in MRP system...

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MRP – Part II technical issues in MRP system design source: Vollmann, Berry, Whybark and Jacobs’ textbook – Chapters 7 lot – sizing processing frequency in MRP bucketless MRP systems Pegging Scheduled receipts vs planned order releases
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IE 324  -  April 20, 2010 Lecture Notes on MRP - Part II 2 Lot-sizing in MRP The problem of finding order quantities (planned order releases) and their timing is the lot sizing problem. Checking the row of “net requirements” in the MRP record, we observe: Known, Time-varying (dynamic), Lumpy, Dependent demand.
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IE 324  -  April 20, 2010 Lecture Notes on MRP - Part II 3 Lot-sizing in MRP Costs involved in lot sizing: Setup (fixed ordering) cost Inventory holding cost Backorder cost Production cost. What order quantities will minimize the total cost? (usually the sum of setup and inventory holding cost) There are several popular heuristic lot-sizing methods. They provide “good” -near-optimal or sometimes even optimal solutions. Silver & Meal heuristic, part-period balancing heuristic, least unit cost heuristic, …
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IE 324  -  April 20, 2010 Lecture Notes on MRP - Part II 4 Lot-sizing in MRP lot sizing method. generates a minimum-cost solution yielding optimum order quantities. The optimization is based on Dynamic Programming. The objective is minimizing the inventory holding + setup (ordering) cost over the planning horizon. The lot-sizing problem in the context of MRP is the so-called “Uncapacitated Lot Sizing Problem” in the literature.
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IE 324  -  April 20, 2010 Lecture Notes on MRP - Part II 5 Lot-sizing in MRP “Uncapacitated Lot Sizing Problem” in the literature. Let demand (net requirements): (r 1 , r 2 , r 3 ,…, r n ) known. Inventory holding cost: h TL / unit /period, charged for the ending inventory. Setup cost: K TL / order. No shortages. We can formulate the problem as an IP as follows:
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IE 324  -  April 20, 2010 Lecture Notes on MRP - Part II 6 Lot-sizing in MRP Uncapacitated Lot Sizing Model – IP: ( 29 { } n 1,. .., t 0 I , P and 0,1 y n 1,. .., t y M P n 1,. .., t r I P I s.to. P c I h y K min t t t t t t t t 1 - t n 1 t t t t = = = = - + + + = given. I and r M inventory period - of - end : I size; order : P where 0 n 1 t t t t = =
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IE 324  -  April 20, 2010 Lecture Notes on MRP - Part II 7 Lot-sizing in MRP Uncapacitated Lot Sizing Model : In an optimal policy I t-1 . P t = 0. There cannot be both production and inventory carried to period t. Proof
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This note was uploaded on 05/23/2010 for the course IE 324 taught by Professor T during the Spring '10 term at Middle East Technical University.

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11-MRP_II (1) - MRP Part II technical issues in MRP system...

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