Part Period Procedure Optimum Lot-Sizing Procedures

The part period procedure adheres to the "classic" lot size formula for the minimum costs whereby variable costs (storage costs) are equal to the lot size independent costs.

Starting from the shortage date, successive requirements are grouped together to form lots until the sum of the storage costs equals lot size independent costs. (In other words, this procedure involves an adjustment of quantity-dependent and non-quantity dependent costs.)

The following figures are used in the example:

Price: $20

Lot size independent rcosts: $100

Storage costs percentage: 10%

In the example of the part period procedure above, the best lot size is 2000 pieces because, if more requirements were added to this lot, total storage costs would be larger than the lot size independent costs.