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Optimization of batch sizes, A case-study in the process industry.

Gottfridsson, Simon and Farbäck, Viktor (2018) MIOM05
Production Management
Abstract
Background and Research question
The company have a complex product portfolio and production facility. Currently, the batch
sizes in production are based on experience and is not based on any cost analysis. The
central organization have recently put more emphasis on the batch sizes, especially in a
context of increasing the efficiency of the packaging lines. The company wishes to
investigate the batch sizes and analyze the consequences of implementing a method to
calculate batch sizes from a cost perspective.

Methodology
The chosen research method is a balanced approach which incorporates both qualitative-
and quantitative research. Interviews and archive analysis was used to develop an
understanding of the problem... (More)
Background and Research question
The company have a complex product portfolio and production facility. Currently, the batch
sizes in production are based on experience and is not based on any cost analysis. The
central organization have recently put more emphasis on the batch sizes, especially in a
context of increasing the efficiency of the packaging lines. The company wishes to
investigate the batch sizes and analyze the consequences of implementing a method to
calculate batch sizes from a cost perspective.

Methodology
The chosen research method is a balanced approach which incorporates both qualitative-
and quantitative research. Interviews and archive analysis was used to develop an
understanding of the problem and obtaining data for a quantitative analysis. The research
took place at the company and the data was collected from the company’s IT systems.



Theoretical Framework
Theory relevant to the problem at hand was first studied and is presented in the report. This
theory is well-established in operations research and is used as both a foundation to analyze
the current situation as well as a base for suggestions of how to solve the company’s
problems.



Conclusion
The EOQ model was chosen as a suitable theoretical model for the company. During the
analysis, several findings were made regarding the current approach of determining costs
and managing the inventory. The current approach of determining batch sizes encourages a
reactionary way of thinking for operational planners where the most important SKUs are
shown most regard due to pressure from top management. The current way of calculating
safety stock have also been shown to greatly discourage an increase in batch sizes, even
though an increase could both be cost-effective and increase efficiency in production. Hence,
a new theoretically sound method to calculate safety stock s suggested.



The report presents an approach that takes cost, the perishability of products and operational
constraints into account and provides the company with an Excel based decision making
tool. (Less)
Please use this url to cite or link to this publication:
author
Gottfridsson, Simon and Farbäck, Viktor
supervisor
organization
course
MIOM05
year
type
M1 - University Diploma
subject
keywords
Lotsizing, Changeover cost, Holding cost, Safety stock, EOQ, Process industry.
other publication id
18/5605
language
English
id
8953524
date added to LUP
2018-06-28 11:00:52
date last changed
2018-06-28 11:00:52
@misc{8953524,
  abstract     = {{Background and Research question 
The company have a complex product portfolio and production facility. Currently, the batch 
sizes in production are based on experience and is not based on any cost analysis. The 
central organization have recently put more emphasis on the batch sizes, especially in a 
context of increasing the efficiency of the packaging lines. The company wishes to 
investigate the batch sizes and analyze the consequences of implementing a method to 
calculate batch sizes from a cost perspective. 
 
Methodology 
The chosen research method is a balanced approach which incorporates both qualitative- 
and quantitative research. Interviews and archive analysis was used to develop an 
understanding of the problem and obtaining data for a quantitative analysis. The research 
took place at the company and the data was collected from the company’s IT systems. 

 

Theoretical Framework 
Theory relevant to the problem at hand was first studied and is presented in the report. This 
theory is well-established in operations research and is used as both a foundation to analyze 
the current situation as well as a base for suggestions of how to solve the company’s 
problems. 

 

Conclusion 
The EOQ model was chosen as a suitable theoretical model for the company. During the 
analysis, several findings were made regarding the current approach of determining costs 
and managing the inventory. The current approach of determining batch sizes encourages a 
reactionary way of thinking for operational planners where the most important SKUs are 
shown most regard due to pressure from top management. The current way of calculating 
safety stock have also been shown to greatly discourage an increase in batch sizes, even 
though an increase could both be cost-effective and increase efficiency in production. Hence, 
a new theoretically sound method to calculate safety stock s suggested. 

 

The report presents an approach that takes cost, the perishability of products and operational 
constraints into account and provides the company with an Excel based decision making 
tool.}},
  author       = {{Gottfridsson, Simon and Farbäck, Viktor}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Optimization of batch sizes, A case-study in the process industry.}},
  year         = {{2018}},
}