Economic-Lot-Size Formulas in Manufacturing

Abstract

Economic-lot-size formulas result in order quantities that minimize combined inventory and set-up (and ordering) costs. In manufacturing problems, economic-lot-size formulas may result in unrealizable schedules—in some production periods the shop may not be able to meet requirements, whereas at other times slack periods that result in idleness may occur. This paper describes a technique that permits the computation of order quantities so that requirements are met with available labor and machines. The technique involves a simple step-by-step computation particularly adaptable to electronic computers.