19. Which lot-sizing rule minimises total set-up plus holding cost in a deterministic time-phased plan?
Answer: D
The Wagner–Whitin algorithm minimizes total set-up plus holding cost in a deterministic time-phased plan.
The Wagner–Whitin algorithm is specifically designed to minimize the total costs associated with set-ups and holding inventory over a predetermined time horizon, making it the most effective choice in this context.
A) Lot-for-lot
Lot-for-lot is a lot-sizing technique that orders exactly what is needed for production or sales, thus avoiding excess inventory. However, it does not account for minimizing set-up costs over time, as it may lead to frequent set-ups, making it less cost-effective compared to methods specifically aimed at cost minimization.
B) Economic order quantity
Economic order quantity (EOQ) is a formula used to determine the optimal order quantity that minimizes total inventory costs. While it addresses holding and ordering costs, it does not adapt to a dynamic, time-phased plan like the Wagner–Whitin algorithm, which is focused on minimizing costs across varying periods.
C) Silver–Meal heuristic
The Silver–Meal heuristic is a method that helps in determining the optimal order size based on the trade-off between set-up and holding costs. Although it improves upon basic lot-sizing methods, it does not guarantee the absolute minimum cost across a deterministic time-phased plan as the Wagner–Whitin algorithm does.
D) Wagner–Whitin algorithm
The Wagner–Whitin algorithm systematically evaluates the costs associated with different production schedules to find the one that minimizes the total of set-up and holding costs. This method is particularly effective in deterministic settings, making it the ideal choice for minimizing costs in a time-phased plan.
Conclusion
The Wagner–Whitin algorithm stands out as the most effective lot-sizing rule for minimizing total set-up plus holding costs in a deterministic time-phased plan. Other options, while useful in certain contexts, do not provide the same level of cost efficiency or strategic planning as the Wagner–Whitin algorithm, which is specifically tailored for this purpose.