Material Requirement Planning Using the Economic Order Quantity Model: An Application in a Perfumery and Cosmetics Company

Abstract

Due to increasing competition and customers Requirement, in general the business decisions involve Questions related to cost reduction and optimization in Production planning. In this context, it will be approach The model - Economic Order Quantity (EOQ). Use of this Model is already common in various cases, however, in Most, this method is not incorporated into the material Requirement planning (MRP). The article aims to analyze The feasibility of reducing associated costs with Modeling the problem by applying the EOQ concepts in MRP in a company of perfumery and cosmetics, in order to Compare the results between the current batch policy with the policy based in eoq model. For it, it was extracted the demand and costs information from the corporate Management system (ERP) of the organization. The Application of EOQ found the optimum amount of orders, which was proposed in both cases, the first considering the optimum value calculated and the second suggesting adaptations in order quantities. As a result, it was possible to reduce total costs comparing to the method practiced By the company.