A Technique to Minimize Overtime in the Capacitated MRP Problem

Since the development of early versions of material requirements planning (MRP) systems, it has been known that a weak link in this technique is the failure to consider the available capacity at the time the lot sizes for individual items are calculated. Ignoring the available capacity may result in infeasible production plans i.e., those that can only be accomplished with the use of overtime. We present a technique to search for feasible production plans by means of minimizing the total overtime. The technique is based on modifying periodic-orderquantity (POQ) lot sizes within a tabu search framework. Computational experiments with the largest problem structure reported in the literature show that the procedure is effective in determining lot sizes for individual items that either minimize or eliminate overtime. Additional experiments reveal that, with appropriate calibration of search parameters, the procedure is also able to deal with more general cost functions (e.g., those that include holding and setup costs). key words: lot-sizing, capacity requirements planning, materials requirement planning.