Intended learning outcomes: Produce an overview on production or procurement costs, batch-size-dependent unit costs, setup and ordering costs, and carrying cost. Explain optimum batch size, optimum length of order cycle, the classic economic order quantity formally and in practical application. Disclose extensions of the batch size formula.
Batch sizing, or lot sizing, is the process of, or techniques used in, determining batch or lot size ([ASCM22]).
Course section 11.4: Subsections and their intended learning outcomes
11.4 Batch Sizing, or Lot Sizing
Intended learning outcomes: Produce an overview on production or procurement costs, batch-size-dependent unit costs, setup and ordering costs, and carrying cost. Explain optimum batch size, optimum length of order cycle, the classic economic order quantity formally and in practical application. Disclose extensions of the batch size formula.
11.4.1 Production or Procurement Costs: Batch-Size-Dependent Unit Costs, and Setup and Ordering Costs
Intended learning outcomes: Differentiate between batch-size-dependent production or procurement costs and batch-size-independent production or procurement costs.
11.4.1b Carrying Cost
Intended learning outcomes: Explain carrying cost and carrying cost rate. Produce an overview on costs of financing or capital costs, storage infrastructure costs and the risk of depreciation.
11.4.2 Optimum Batch Size: The Classic Economic Order Quantity (EOQ)
Intended learning outcomes: Explain the concept of the economic order quantity (EOQ). Explain variables for the EOQ formula.
11.4.2b The Economic Order Quantity (EOQ) Formula
Intended learning outcomes: Explain the economic order quantity (EOQ) formula. Describe the cost curves as a function of batch size.
11.4.2c Optimum Length of Order Cycle
Intended learning outcomes: Present the optimum length of order cycle.
11.4.3 Economic Order Quantity (EOQ) Formula: Sensitivity Analysis
Intended learning outcomes: Present in detail the sensitivity analysis of the EOQ calculation.
11.4.3b Economic Order Quantity (EOQ) and Optimum Length of Order Cycle in Practical Application
Intended learning outcomes: Produce an overview on the practical implementation of the EOQ formula. Identify several factors that influence a maximum or minimum order quantity.
11.4.4 Extensions of the EOQ Formula: Lead-Time Orientation and Discount Levels
Intended learning outcomes: Present lead-time-oriented batch sizing. Describe batch sizing considering discount levels.
11.4.4b Extensions of the EOQ Formula: Joint Replenishment
Intended learning outcomes: Produce an overview on joint replenishment: kit materials management and collective materials management.
Course 11: Sections and their intended learning outcomes
Course 11 – Inventory Management and Stochastic Materials Management
Intended learning outcomes: Describe usage statistics, analyses, and classifications. Explain in detail the order point technique. Disclose how to calculate safety stock. Differentiate various batch or lot sizing techniques.
11.1 Stores and Inventory Management
Intended learning outcomes: Present characteristic features of stores management. Produce an overview on inventory transactions. Describe physical inventory and inventory valuation.
11.2 Usage Statistics, ABC Classification, XYZ Classification, and Other Anlayses
Intended learning outcomes: Present statistics on inventory transactions, sales, and bid activities. Explain the ABC Classification and the Pareto Chart. Describe the XYZ Classification and Other Analyses and Statistics.
11.3 ROP (Re)-Order Point Technique, and Safety Stock Calculation
Intended learning outcomes: Explain the (re-)order point technique and variants thereof. Describe the safety stock calculation with continuous demand. Disclose the determination of the service level and the relation of service level to fill rate.
11.4 Batch Sizing, or Lot Sizing
Intended learning outcomes: Produce an overview on production or procurement costs, batch-size-dependent unit costs, setup and ordering costs, and carrying cost. Explain optimum batch size, optimum length of order cycle, the classic economic order quantity formally and in practical application. Disclose extensions of the batch size formula.
11.5 Summary
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11.6 Keywords
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11.7 Scenarios and Exercises
Intended learning outcomes: Calculate examples for the ABC Classification. Disclose the ABC-XYZ analysis in materials management. Differentiate between safety stock variation and demand variation. Determine batch size depending on stockout costs. Assess the effectiveness of the order point technique.
11.8 References
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