Lot Size Optimization of Purchased Products

Abstract

In Turkey Pınar Et is one of the leading companies in meat sector since 1985. Within the scope of senior year project this paper considers the optimization of lot sizes of auxiliary and packaging materials purchased by the company. Aim of the study is the minimization of total inventory costs which include unit purchasing setup and holding costs subject to a service level. For this purpose multi-item dynamic lot sizing models are formulated with time-varying demand deterministic lead time with backorders allowed. The first model is formulated by considering Joint Replenishment of items supplied from the same suppliers. The second model is formulated to reflect Vendor-Based minimum lot sizes and rounding quantities to the replenishment quantity. Although these models produce an optimal solution in a reasonable time a Wagner-Whitin based heuristic algorithm is developed as an additional solution to the company. All of the models run according to Rolling Horizon (RH) approach which updates the existing plan at the beginning of each planning period in order to cope with changes in demand and other parameters. As a result of the study potential savings in holding cost and reduction in planning duration are obtained and are reported. © 2022 Elsevier B.V. All rights reserved.