In this chapter, we discuss lot-sizing heuristics that can be used to manage inventory of a single item whose demand varies from period to period. Because the demand is not constant the classical EOQ formula cannot be applied. Several heuristics are found in literature. The popular ones that have been considered in this chapter are (1) lot-for-lot method, (2) part-period balancing method, (3) least unit cost method, (4) silver-meal method, and (5) Wagner-Whitin method. The primary goal of these heuristics is to determine the lot size that would minimize the total ordering and carrying costs. Depending on the situation, one of these heuristics can be implemented to obtain least cost inventory management solution.
KeywordsLot sizing heuristic Lot for lot Part period balancing Silver-meal Least unit cost Wagner-Whitin
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