How to Protect Against Demand and Yield Risks in MRP Systems

Abstract

Traditional MRP systems suffer from several weaknesses, one of them being the disregard of uncertainties like those referring to demand and supply quantities. Advanced MRP concepts handle these uncertainties by incorporating safety stocks and scrap allowances into order release calculations. However, they fail to address how these measures of risk protection might interact. Here, it is shown by using analyses from stochastic inventory control how the performance of MRP-generated control rules can be assessed and how appropriate control parameters for MRP can be determined.