The effects of lot sizing and dispatching on customer service in an MRP environment

Results are presented of a simulation analysis of a hypothetical fabrication and assembly shop controlled by material requirements planning. The purpose of the study is to investigate the impact of lot sizing on the customer service performance of dispatching techniques in an MRP-controlled assembly job-shop operating near capacity. Six dispatching techniques are compared based on the tardiness of customer orders under four lot-sizing techniques, two levels of demand, and two levels of nervousness. The study is conducted with a stable product mix, limited production capacity and fixed routings. Random shifts in short-term product mix cause short-term bottlenecks, but one of the 15 work stations has less than 10% idle time and is the most commonly encountered bottleneck. The interaction of lot-sizing and dispatching techniques was found to be a function of capacity utilization, a factor influenced by demand and nervousness level. Under low demand, earliest job due date yielded the best performance with regard to the percentage of tardy orders, average order tardiness, and maximum order tardiness. Under high demand, earliest job due date performed best with respect to average order tardiness and maximum order tardiness, but the best dispatching technique with respect to percentage of tardy orders depended on the lot-sizing technique and the nervousness level. Under high demand and high nervousness, effective capacity decreased and queues increased with economic order quantity, period order quantity, or least total cost. Economic order quantity generated the smallest batches. Period order quantity and least total cost generated extra set-ups under high nervousness. Use of either of the three lot-sizing techniques at high demand and high nervousness forced a choice between a dispatching technique that yields a low percentage of orders tardy (earliest modified operation due date) and one that generates low maximum order tardiness (earliest job due date). The Silver-Meal heuristic consumed less effective capacity than the other lot-sizing techniques. Using Silver-Meal at high demand and nervousness, earliest job due date performed best with respect to each tardiness measure. The bottleneck causes the plant to behave like a single machine shop. Since large queues are maintained at the bottleneck, that is where the choice of dispatching technique is critical. Earliest due date minimizes the percentage of tardy orders. Earliest modified operation due date, operating like the shortest processing time rule, minimizes the percentage of tardy orders, but maximum tardiness is high. These results may stimulate new interest in single-machine scheduling. The combination of least total cost and earliest job due produced the best overall performance at low demand. At high demand, Silver-Meal and earliest job due date achieved the best performance.