JOINT EFFECT OF FORECASTING AND LOT-SIZING METHOD ON COST MINIMIZATION OBJECTIVE OF A MANUFACTURER: A CASE STUDY

Forecasting and lot-sizing problems are key for a variety of products manufactured in a plant of finite capacity. The plant manager needs to put special emphasis on the way of selecting the right forecasting methods with a higher level of accuracy and to conduct procurement planning based on specific lot-sizing methods and associated rolling horizon. The study is conducted using real case data form the Fibertex Personal Care, and has evaluated the joint influence of forecasting procedures such as ARIMA, exponential smoothing methods; and deterministic lot-sizing methods such as the Wagner-Whitin method, modified Silver-Meal heuristic to draw insights on the effect of the appropriate method selection on minimization of operational cost. The objective is to explore their joint effect on the cost minimization goal. It is found that a proficient selection process has a considerable impact on performance. The proposed method can help a manager to save substantial operational costs.