Heuristic Lot‐sizing and Sequencing Rules in a Multistage Production‐inventory System

ABSTRACT Material Requirements Planning (MRP) is currently being applied and used extensively in industry and is being proclaimed as the solution to many of the problems of traditional production‐inventory control problems. While the latter may be true, MRP is not without its own problems, two of which are the decisions concerning the appropriate lotsizing and sequencing rules to use in order to improve system performance. This paper describes a computer simulation study which was conducted to determine the effects of using various sequencing and lot‐sizing rules on various performance criteria in a multistage, multiproduct, production‐inventory system using MRP. The results of the study indicate that the application of various rules causes changes in system performance and that an interaction effect exists between lot‐sizing and sequencing rules. What is more important is that a set of guidelines is developed to enable the practitioner to choose a lot‐sizing rule and a sequencing rule that will tend to improve the performance of his system for the various performance criteria.