MFCA-based simulation analysis for production LOT-size determination in a multi-variety and small-batch production system

In the modern manufacturing industry, environmental considerations are part of numerous phases of production. Inappropriate production lot-size determination can generate substantial scrapped overdue stocks and idle processing, which lead to serious environmental burdens. In this paper, by simulating the Pull mode and back scheduling of a multi-variety and small-batch production system, large overstocks and other wastes caused by current production lot-size determination are traced. For comparison with the conventional cost accounting used in the original simulation model, a new environmental management accounting method, Material Flow Cost Accounting (MFCA), is introduced to identify negative products cost related to environmental impacts hidden in the production processes. After sensitivity analysis by gradually regulating the production lot-size, two regular changes in the negative products cost and the corresponding percentages in the total cost are observed. These change trends indicate that a reasonable determination strategy for production lot-size can improve both economic and environmental performances.