Title: The effect of transfer lot size on manufacturing lead time: a stochastic analysis

Authors: Clarissa Fullin Barco; Moacir Godinho Filho

Addresses: Department of Industrial Engineering, Federal University of São Carlos, São Carlos, Brazil ' Department of Industrial Engineering, Federal University of São Carlos, São Carlos, Brazil

Abstract: This paper aims to explore, in a quantitative way, the effect of production and transfer lot size on the manufacturing lead time in an environment subject to uncertainties. In order to achieve this objective, a Monte Carlo simulation model is proposed, and several scenarios are analysed, considering six shop-floor variables. The results demonstrate that transfer lot size has little effect on lead time when operating with a manufacturing lot size away from optimal lot size. In order to obtain an excellent performance concerning lead time, it is first necessary to reduce the manufacturing lot size before making efforts to reduce transfer lot size. The results also show that adopting an optimal manufacturing lot size allows the production system to be more stable, allowing shorter lead times. The effect of a supplier manufacturing lot size smaller than optimal lot size on retailer safety stock is disastrous. This result is worse when the desired cycle service level and the demand coefficient of variability are high. [Submitted: 9 November 2019; Accepted: 28 November 2020]

Keywords: manufacturing lead time; transfer lot; manufacturing lot; safety stocks; uncertainty; Monte Carlo simulation.

DOI: 10.1504/EJIE.2021.10037979

European Journal of Industrial Engineering, 2021 Vol.15 No.6, pp.825 - 851

Received: 09 Nov 2019
Accepted: 28 Nov 2020

Published online: 27 Oct 2021 *

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