OM Assignment

LOT SIZING
Techniques
Least Total Cost

Groffs Algorithm
Freeland & Colley
McLaren's Order Moment
Submitted By:
Zainab Mubashir
Hamza Bin Saud
Saba Gulzari
Zara Ashfaq
Hassan Obaid
Least Total Cost

Periods
Combined
Costs ($)
Holdin
Result
g
Demand
Total Lot
Size
Part Periods ($)
30
30
100
2,3
40
70
40x1
100
40
70
40x1 + 0x2
100
40
10
80
40x1 + 0x2 + 10x3
100
70
2,3,4
2,3,4,5
Setup
2,3,4,5,
40x1 + 0x2 + 10x3
100 230
40
120
+ 40x4
6
Select 2-5. because at 6 setup cost is less than holding
6
40
40
100
6,7
30
70
30x1
100
30
70
30x1 + 0x2
100
30
6,7,8
30x1 + 0x2 +
Setup >
Holding
Setup >
Holding
Setup >
Holding
Setup >
Holding
Setup <
Holding
Setup >
Holding
Setup >
Holding
Setup >
Holding
Setup <
Least Total Cost

Total Cost = Setups +
holding
Setups = 3 costing $300
Holding = 155 x $1 =
$155
Period
1
2
3
TOTAL= $455
Gross requirement
35 30 40
4
0
5
10
6
40
7
30
8
0
9
30
10
55
10
0
10
0
0
40
70
30
0
0
0
0
30
85
55
0
Scheduled Receipt
On hand
35
Net Requirement
Planned Order
Receipt
Planned Order
Release
35
0
80
0
30
80
50
0
70
85
Groffs Method
N(N-1)D <= 2S/h

Where
n = number of period carried
D = demand in that period
S= setup cost
H= holding or carrying cost
Groff Method
Periods
Combined
2
2,3
2,3,4
Total
Deman
Lot Size
d
30
40
0
Part Periods ($)
Period
Carried
(n)
n(n-1)D
<=2
00
30
70
70
0
0
0
Yes
40x1
1
0
Yes
40x1 + 0x2
2
0
Yes
40x1 + 0x2 +
3
60
2,3,4,5
10
80
Yes
10x3
2,3,4,5,
40x1 + 0x2 +
4
480
40
120
No
10x3
+
40x4
6
Select 2-5. because at 6 does not satisfy this condition n(n-1)D <=2S/H
0
0
0
6
40
0
Yes
30x1
1
0
6,7
30
70
Yes
30x1 + 0x2
2
0
6,7,8
0
70
Yes
6,7,8,9
30
100
6,7,8,9,
10
55
155
30x1 + 0x2 +
30x3
30x1 + 0x2 +
30x3 + 55x4
180
Yes
660
No
Select 2-9. because at 10 does not satisfy this condition n(n-1)D <=2S/H
0
0
10
55
0
0
yes
Groff Method
holding
$245
TOTAL= $490
Period
Gross requirement
1
35
2
30
3
40
4
0
5
10
6
40
7
30
8
0
9
30
10
55
35
0
0
30
80
50
0
10
0
10
0
0
40
100
60
0
30
0
30
0
0
55
55
Scheduled Receipt
On hand
Net Requirement
Planned Order
Receipt
Planned Order
Release
35
80
100
55
Freeland & Colley

Periods
Combined
2
2,3
2,3,4
Total
Deman
Lot Size
d
30
40
0
Part Periods ($)
0
70
70
0
40x1
40x1 + 0x2
40x1 + 0x2 +
2,3,4,5
10
80
10x3
2,3,4,5
40x1 + 0x2 +
40
120
10x3 + 40x4
,6
Select 2-5. because at 6 does not satisfy this
0
6
40
0
30x1
6,7
30
70
30x1 + 0x2
6,7,8
0
70
6,7,8,9
30
100
6,7,8,9
,10
55
155
30x1 + 0x2 +
30x3
30x1 +0x2
+30x3+ 55x4
Holding
Cost
Period
Carried
(n)
>10
0
0
1
2
0
40
0
No
No
No
30
No
160
Yes
condition h(t)D>S
0
0
1
30
2
0
No
No
No
90
No
220
yes
Select 2-9. because at 10 does not satisfy this condition h(t)D>S

0
0
10
55
0
0
No
FC
holding
$245
Period
2
3
TOTAL=
$490 1
Gross requirement
35 30 40
4
0
5
10
6
40
7
30
8
0
9
30
10
55
10
0
10
0
0
40
100
60
0
30
0
30
0
0
55
55
Scheduled Receipt
On hand
35
Net Requirement
Planned Order
Receipt
Planned Order
Release
35
0
80
0
30
80
50
0
100
55
McLarens Order
Moment (MOM)
MOM method is similar to PBB
You have to accumulate parts until the
target value is achieved
OMT= d(t=1, T-1 t + (TBO T)*T)
o
o
o
o
o
OMT= Order moment target

D= average requirements per period
[270/10=27]
TBO= EOQ/d [73/27=2.7]

T= Largest integer less than or equal the TBO
OMT = 67
[2]
MOM
When the accumulated parts period equal or exceed
this value, a second test is done that determines
whether to include one more period in the lot:
h(k)D < S
Where:
h= Holding cost per unit
S= Setup cost
K= No. of periods will be carried
Dt= current period requirement
[$1]
[$100]
MOM
Periods
Combined
Deman
d
Total Lot
Size
Part Periods ($)
Period
Carried
(n)
Holding Cost
0
0
2
30
30
0
40x1
1
40
2,3
40
70
40x1 + 0x2
2
0
2,3,4
0
70
40x1 + 0x2 + 10x3
3
30
2,3,4,5
10
80
Part period exceed OMT =67, run 2nd test 1(4)10<=100 =yes so
include period 5 demand
0
0
0
6
40
40
30x1
1
30
6,7
30
70
30x1 + 0x2
2
0
6,7,8
0
70
30x1 + 0x2 +
3
90
6,7,8,9
30
100
30x3
Part period exceed OMT =67, run 2nd test 1(4)30<=100 =no so
dont include period 9
0
0
9
30
30
0
1
55
10
55
85
55x1
MOM
holding
$155
Period
TOTAL= $455 1
2
3
Gross requirement
35 30 40
4
0
5
10
6
40
7
30
8
0
9
30
10
55
10
0
10
0
0
40
70
30
0
0
0
0
30
85
55
0
Scheduled Receipt
On hand
35
Net Requirement
Planned Order
Receipt
Planned Order
Release
35
0
80
0
30
80
50
0
70
85

OM Assignment

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LOT SIZING

Least Total Cost

Least Total Cost

Part Periods ($)

40x1 + 0x2 + 10x3

Least Total Cost

N(N-1)D <= 2S/h

Part Periods ($)

Freeland & Colley

Part Periods ($)

Select 2-9. because at 10 does not satisfy this condition h(t)D>S

OMT= Order moment target

TBO= EOQ/d [73/27=2.7]

Part Periods ($)

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