Incorporating Time Value of Money into Lot-Sizing Decisions for Improved Supply Chain Performance

Supply chain performance depends heavily on effective inventory management, for which appropriate lot-sizing is critical.This research develops an improved lot-sizing model for material requirements planning (MRP) by incorporating the time value of money.The proposed Silver-Meal method is compared to the traditional approach using data from 5 Indonesian manufacturers.Results indicate 1.78% reduced inventory costs over a 2-year horizon.Further analysis reveals superior performance under varying financial parameters.This research contributes to the literature by addressing limitations in classical MRP models.It provides a valuable decision-making tool for practitioners to enhance supply chain efficiency.Opportunities exist for validating findings across more industry contexts.