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Material requirements planning (MRP) and purchase discounts
Author(s) -
Benton W.C.,
Whybark D.Clay
Publication year - 1982
Publication title -
journal of operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.649
H-Index - 191
eISSN - 1873-1317
pISSN - 0272-6963
DOI - 10.1016/0272-6963(82)90029-8
Subject(s) - sizing , material requirements planning , computer science , order (exchange) , moment (physics) , work (physics) , unit (ring theory) , operations research , operations management , business , economics , microeconomics , production (economics) , mathematics , engineering , mechanical engineering , art , physics , mathematics education , finance , classical mechanics , visual arts
This paper reports the results of a simulation experiment that compares alternative procedures for determining purchase quantities in MRP systems when quantity discounts are available. The procedures are least unit cost (LUC), McLaren's order moment (MOM) and a “traditional” procedure that ignores the time‐phased information available from an MRP system. One of the factors in the experiment was requirement uncertainty, a factor heretofore not incorporated in MRP lot‐sizing research. The results of the experiment confirm MOM (and to a lesser extent LUC) as an effective lot‐sizing procedure. In addition, the work shows that the differences between the procedures tend to vanish as the amount of uncertainty in the requirements increases.