Application of Economic Order Quantity on Production Scheduling and Control System for a Small Company

Struggling to live in the 21 century, lots of small companies of which the production scheduling and control system (PSCS) are based on a rule of thumb. Without the precise mathematic model, the rule of thumb method may lead to inventory shortages and excess inventory. For reaching better controls of PSCS, this study intends to simulate a material requirement planning (MRP) production system with adopting an economic lot-sizing (EOQ) model to diminish varieties of costs for small sized companies under job-shop environments. The proposed EOQ adopting MRP approach is supposed to have better economics of PSCS than rule-of-thumb methods. A case analysis of a small company X in Thailand is conducted for verifying this proposition. Company X regularly relied on rules-of-thumb to handle PSCS. In this study, two kinds of materials and three types of products are traced top-down from production planning (PP), master production schedule (MPS), to MRP along a period of two months since July 2012. This study undertakes a series of data collection in the field. The analyzed results indicate that the presented model really reach more economics than rule-of-thumb methods for company X.