An adaptation of the EOQ formula for JIT quasi-pull system production

This research demonstrates for the first time that in a just-in-time (JIT) quasi-pull production environment, a model adapted from the Economic Order Quantity and made up of two specific formulas can be employed for calculating an optimised lot size. The assumptions of our model are: a low level of defects, and insignificant shortage backordering and failure of the equipment. JIT quasi-pull production is the state typically reached by many manufacturing companies because it is almost impossible to achieve zero set-ups and zero work-in-process (WIPs) even in the best Lean Production implementations. In this model, finished products are shipped at once in a JIT way. The two developed formulas are specialised: one for balanced stations/processes and the other for unbalanced stations; the formulas allow calculation of an optimised lot size. Several applications of the formulas have been tested and discussed through a case study. Findings demonstrated that the optimised quantity of a lot size has to be smaller than the customer’s daily demand for the product. Moreover, in case of unbalanced stations with long cycle times, the formula forces the company to reduce its set-up times and the cycle times. The new model will be of interest to practitioners who are seeking a way to balance the costs of set-ups and the cost of holding some WIPs and offers interesting avenues for new research.