Material Requirement Planning using LFL, EOQ and PPB Lot Sizing Technique

Abstract

Inventory control is very important to maintain the right balance of stock of a company warehouse no matters how big or small an organization in any sector of the economy. Controlling the materials flow in the inventory can be challenging especially for a small-scale company. With the limited size of storage and never-ending incoming demands, the flow of inventory must be managed efficiently and systematically to minimize the lowest possible of ordering materials cost needed to produce high quality products. By using Material Requirement Planning (MRP) approach, this model allows an organization to plan manufacturing activities, delivery schedules, and purchasing activities for planned production and customer deliveries. This paper demonstrates the efficiency of MRP model using Lot for Lot (LFL), Economic Order Quantity (EOQ) and Part Period Balancing (PPB) lot sizing technique. While LFL orders as much as needed, EOQ and PPB controls the amount of an ideal quantity of order to minimize the overall cost of inventory and set up cost. The main objectives of this paper are to illustrate the basic calculation of MRP and how it helps organizations to plan their inventory flow using LFL, EOQ and PPB technique and how each of these techniques is utilized according to its specific demand pattern.