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MATERIAL REQUIREMENTS PLANNING UNDER UNCERTAINTY
Author(s) -
Whybark D. Clay,
Williams J. Gregg
Publication year - 1976
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1976.tb00704.x
Subject(s) - safety stock , stock (firearms) , lead time , risk analysis (engineering) , computer science , operations research , material requirements planning , inventory management , investment (military) , business , reliability engineering , operations management , supply chain , economics , engineering , microeconomics , production (economics) , mechanical engineering , marketing , politics , political science , law
This paper presents a framework for characterizing and studying the uncertainty which can affect inventory investment and service level performance in a material requirements planning (MRP) system. It also presents the results of a simulation experiment which compared two techniques (safety stock and safety lead time) for building inventory to protect against uncertainty. The simulation results disclose consistent differences between the techniques in protecting a representative part against timing and quantity uncertainty in both demand and supply for the part. The paper not only provides some initial insights into the behavior of MRP systems under uncertainty, but also establishes some guidelines for choosing between safety stock and safety lead time.