This paper is the result of a case study conducted at Uppåkra Mekaniska AB during the spring of 2006. The task that was presented by Uppåkra was to develop a basis for a decision for the planning activities at the company, so that in the future they can create lot-sizes which are based upon a total cost perspective. Total cost in regards to lot-sizing is defined as the sum of the administrative reordering costs and warehousing cost per stock keeping unit.

To collect data a series of interviews and observations were conducted. This data was then used during the lot-sizing simulation and analysis. The 15 units that the simulation was conducted on were grouped into three item classes depending how many different machine setups they required during the production process. Class A contained items which resulted in only one machine setup; where as those items in Class B had several different setups. Class C represents items without any machine setups, but requires shorter preparation for assembly. In the simulations the Wilson’s formula, Economic Part Period (EPP) and Least Cost method (LC) were compared with the lot-sizing model currently used by Uppåkra.

The simulation results showed that there is a large potential to reduce the cost of lot-sizing by using the Wilson’s formula instead of the current model. For the 15 units simulated in this study, there was the potential to reduce costs by 5000SEK per unit yearly.