1. ¹Texas A&M Univesity, USA
2. ²The University of Calgary, Canada

Correspondence: R. L. Bregman, Texas A&M Univesity, Department of Business Analysis and Research, College of Business Administration and Graduate School of Business, 401 Blocker Building, College Station, Texas 77843-4217, USA.

Abstract

This paper introduces an alternative approach for determining lot sizes for purchased components in MRP environments where discounts are available from vendors. This new method is a variation of the least period cost procedure, which was previously found to be a poor performer relative to the least unit cost, McLaren's order moment, and the Chung et al. procedures. The performance of this new version of the least period cost procedure, which actually is a modified version of the original Silver-Meal heuristic, is found to be excellent relative to alternative procedures. In fact, when flexibility of the method to operate in diverse environments and computational time are considered, this modified least-period cost heuristic may be the best procedure available.