Inventory cost model for "just-in-time" production

This paper presents the design and operation of a computer simulation model developed on a SLAM SYSTEM to compare the build up of set up costs and inventory carrying costs with varying lot sizes. While reduction of lot sizes is a necessary step towards implementation of "Just-In-Time" (JIT) in a job shop environment, a careful cost study is required to determine the optimum lot size under the present set up conditions. A simulation model can be designed to graphically display the fluctuation of carrying costs and accumulation of set up costs on a time scale in a dynamic manner. The decision for an optimum lot size can then be based on realistic cost figures.