Optimum lot size “WI” – Least unit cost procedure
Three groups of Lot-sizing procedures are available:
- Static lot-sizing procedures
- Period lot-sizing procedures
- Optimum lot-sizing procedures
I will explain here about one of the Optimum lot-sizing procedures: Least unit cost procedure (WI).
Starting from the shortage date, successive requirements are grouped together to form lots until total costs per unit reach a minumum level. The total cost are equal to the sum of the lot size independent costs plus the total storage costs.
– Lot size field (MRP 1 view) is set with WI for Least unit cost procedure.
– Lot size independent costs (MRP 1 view) and storage costs indicator (MRP 1 view) is set.
Ordering costs is 100 in this sample.
Storage costs percentage for storage cost indicator 1 of plant 1000 is 10% in this sample. It is maintained in customizing OMI4.
– Price is set. It depends on price control. If price control is V, the price is “Moving price”; if price control is S, the price is “Standard price”.
Price is 20 in this sample.
– Requirements exist. In this sample, there are 4 planned independent requirements (PIRs). They are with date 2015/2/6, 2015/2/13, 2015/2/20 and 2015/2/27.
Calculation result of this sample.
|Requirement Date||Requirement qty||Lot Size||Lot Size Ind. Cost||Storage Cost||Total Cost||Unit Cost|
Since the Unit cost for Lot Size 2000 is minimum, requirements are grouped together to form lots with qty 2000.
– Lot size = current Lot Size + new requirement qty.
– Storage Cost = ( Requirement * Price * Storage Cost Percentage * Time in shortage ) / ( 100 * 365)
– Total Cost = current Total Cost + Newly calculated Storage Cost
– Unit Cost = Total Cost / Lot Size
On 2015/2/6, shortage occurs.
Time in shortage is 0 days.
Storage cost = 0.
Total cost = storage cost 0 + Lot size ind. cost 100 = 100
Unit cost = Total cost 100 / Lot size 1000 = 0.100
Time in shortage is 7 days.
Storage cost = (requirement qty 1000 * price 20 * percentage 10 * Time in shortage 7 ) / (100 * 365) = 38.36
Total cost = storage cost 38.36 + current total cost 100 = 138.36
Unit cost = Total cost 138.36 / Lot size 2000 = 0.069
Time in shortage is 14 days.
Storage cost = (requirement qty 1000 * price 20 * percentage 10 * Time in shortage 14 ) / (100 * 365) = 76.71
Total cost = storage cost 76.71 + current total cost 138.36 = 215.07
Unit cost = Total cost 215.07 / Lot size 3000 = 0.072
Time in shortage is 21 days.
Storage cost = (requirement qty 100 * price 20 * percentage 10 * Time in shortage 21 ) / (100 * 365) = 115.07
Total cost = strorage cost 115.07 + current total cost 215.07 = 330.14
Unit cost = Total cost 330.14 / Lot size 4000 = 0.083
See attached text file.