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Lot sizes used in production have a direct impact on the main efficiency
and productivity mesures of manufacturing enterprises such as stock turns,
operations efficiency and the plant flexibility.
- Lot-sizes, of course, directly impact inventory turns.
For instance, if you produce in lots of 5000 units, your
stocks will vary between 5000 and 0 units, for an average
inventory of 2500 units. If your lot size is 60 units, the
resulting projected average inventory will be 30 units.
- Lot-sizes directly impact efficiency. This is because they
determine the length of the production run, and hence, how
often set-ups are necessary to meet a given level of demand
- Lot-sizes drive lead-time. All the items in a product
mix are in competition with the other products in the mix
for the capacity of the bottleneck work center. If the
bottleneck works through one lot per day and the product
mix includes 20 items, it will take 20 days for the bottleneck
to cycle through its product mix. This is a measure of the
bottleneck's flexibility and as well as that of the plant's.
Note that lead-times drive "Order point" and
"Safety Stock" parameters as well.
Determining the right lot-size for each item in the product mix is thus an
important aspect of the planner or operations manager's responsibilities because
it is the single most important parameter that affects the plant's competitive
performance. See
Lance-Lot's key features for more information on how
Lance-Lot enables the planner to discharge this difficult yet paramount
accountability.
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