Topics: Lot/Batch Sizing

Lot size (batch size) optimization yields an effective balance among inventory levels, cycle times and throughput

Policies regarding lot size (batch size) greatly affect the performance of plants, yet are often an afterthought in most facilities. ERP and other manufacturing execution systems ask users to provide a lot size as an input for their calculations, but most people have a difficult time accurately estimating this figure because lot size optimization requires you to answer a list of tough questions, such as:

Typically, most material managers apply some semi-arbitrary rule of thumb--such as "run everything twice a month equally across all products.” These decisions can negatively affect cycle times, inventory levels and customer service levels and can dramatically impact how effectively companies manage process bottleneck(s). A more scientific approach to lot size optimization makes more sense.

Lot Sizing and Lean Manufacturing

Companies looking to Lean techniques to gain efficiencies often hear that ideally, "lot sizing" means that lots sizes should move towards "1" wherever possible. While this is obviously an ideal, it hinges on achieving extremely rapid changeover times. In some cases SMED (single minute exchange of dies) approaches are not possible or even practical. In these cases, optimum lot sizing to minimize cycle times is even more important.

Another common lot sizing approach is "Every Part, Every Interval (EPEI)". In this calculation, management sets a target capacity utilization such as 85%, and then finds the smallest interval of time that allows this utilization of equipment to equal the target while assuming every part is produced during that interval. The lot size for each part is then calculated by forecasting demand for that part over that interval. Again, because of variability, this approach is unworkable in complex, asset-intensive environments.

Invistics has applied leading operations research methods to optimize lots sizes, and takes multiple sources of variability into account for lot size calculations. Utilizing the MachSix methodology and software, customers are able to effectively achieve lot size optimization and strike an effective balance among inventory levels, cycle times and throughput to achieve-and improve-customer service levels and overall performance metrics.

Whether you are a Lean operation looking to achieve lot size optimization, or you're just looking to unlock the latent value of your ERP system and more effectively achieve performance metrics, Invistics' MachSix methodology and software can help.

Contact us to learn more about lot size and batch size optimization.