A Technique for Order Placement and Sizing

Abstract

This article presents a unique heuristic model for purchased item lot‐sizing. The model subsequently is tested using 20 historically popular sample problems. The development of heuristic lot‐sizing models was initiated as a result of difficulties identified during evaluation of the multi‐level lot‐sizing problem encountered in using material requirements planning systems. The “technique for order placement and sizing” (TOPS) is based on the logic of the “incremental part‐period algorithm,” and incorporates four distinct phases. It compares incremental costs and benefits of revising an initial order release schedule by inserting new orders or shifting existing ones. Results of an experimental process exhibited single‐line optimal solutions for all test cases. Additionally, execution times were similar to much simpler but less accurate techniques than those of the optimizing Wagner‐Whitin routine.

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