scope:

Introduction

If there is a continuous requirement for parts and modules which are purchased from a supplier over a prolonged period of time, as is the case, for example, in serial production, the question is raised as to the Optimum order quantity, i.e. the quantity of parts to be ordered per delivery in order to minimise the logistic costs.

While larger order quantities reduce the number of Orders per period and thus the order costs, this results in higher storage costs. Smaller order quantities increase the number of Orders per period and thus the order costs, while reducing the costs for storage.

In order to find the Optimum between the two options and thus arrive at the lowest possible logistic costs, a calculation procedure is proposed based on "Andler's formula". This was developed as early as 1928 to calculate the Optimum production batch size.

The calculation of the Optimum order quantity is based on the following assumptions:

• part price is constant, i.e. independent of the order quantity
• production and storage capacity are unlimited
• Order can be made completely independent of other articles
• requirements are known and constant
• shortages are not permitted
• use of retumable transport aids

This approach does not take account of seasonal fluctuations in requirements, freights, reserve inventories and handling. Special supply concepts (e.g. synchronous with production or JIT) are also not taken into account, as they are based on different optimisation approaches.