A Basic Study on Cost Based Lot Sizing

Abstract

To deal with the diversification of consumers' needs and to survive in the severe competitive environment, a grate deal of effort has been paid by manufacturers. Respecting the background, importance of effective lot sizing has been focused. Although variety of lot sizing algorithms has been proposed, most of their objective functions are based on time and quantity criteria. However, it is difficult to select an appropriate criterion universally, because the most important criterion is changed dynamically in real manufacturing environment. Then product cost seems to be a universal criterion, since profit is generally quite important factor in manufacturing enterprises. On the other hand, a concept of Distributed Virtual Factory (DVF) has been proposed as a new simulation environment for evaluating the performance of whole manufacturing systems. By performing simulation with DVF, all the information required to product cost calculation can be obtained. In this study, we propose an effective lot sizing methodology which performs Activity Based Costing (ABC) and minimizes product cost directly. We clarify the validity of the proposed lot sizing method through simulation experiments with DVF.

Keywords

• activity based costing
• distributed virtual factory
• simulation
• lot size
• cost