To optimize logistic parameters

The order interval of an item influences the cost effectiveness of your production process.

You must find the right balance between long order-intervals and short intervals:

• If order intervals are long, the average inventory levels are relatively high in order to meet the demand between two subsequent production orders. This causes high inventory carrying costs.
• If order intervals are short, many changeovers occur between items that are produced with the same resource. A lot of valuable resource time is spent as setup time. As a result, the average production cost rises.

Frequent changeovers have yet another disadvantage: they decrease the total production capacity.

The lot size has a direct relationship with the order interval:

Lot size = Total demand per day x Order interval 

The computation method for these parameters takes the capacity constraints into account.

How to optimize logistic parameters

Use the following procedure to optimize logistic parameters:

• Define the resource parameters in the Resource Cost Values (cprao3120m000) session.
• Optimize the logistic parameters by resource with the Optimize Lot Sizing (cprao3200m000) session.
• Evaluate the results with the Plan Items - Optimized Lot Sizes (cprao3110m000) session, and select the items for which you want to transfer the optimized parameters.
• Transfer the optimized parameters with the Copy Lot Sizes to Item Ordering Data (cprao3210m000) session.