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Optimizing planned lead times for enhancing performance of MRP systems

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  • Milne, R. John
  • Mahapatra, Santosh
  • Wang, Chi-Tai

Abstract

Material Requirements Planning (MRP) systems are frequently used in discrete parts manufacturing to determine planned order releases. This paper proposes a mixed integer program (MIP) model to determine the optimal values of planned lead times to be used by an MRP system. The MIP contains a set of integrated constraints that determine planned orders similar to how an MRP system would while executing these planned orders under capacity and component availability constraints. The model includes an optional fixed-periods lot sizing policy and minimizes the costs of excess finished and in-process inventories, setups, backorders, exceeding capacity (e.g. outsourcing), and changes in planned lead times. Experimental results—using data from a DRAM manufacturer—indicate that the proposed method of determining planned lead times is superior to a commonly used ad hoc method for determining the planned lead times used by an MRP system.

Suggested Citation

  • Milne, R. John & Mahapatra, Santosh & Wang, Chi-Tai, 2015. "Optimizing planned lead times for enhancing performance of MRP systems," International Journal of Production Economics, Elsevier, vol. 167(C), pages 220-231.
    • Handle: RePEc:eee:proeco:v:167:y:2015:i:c:p:220-231
    DOI: 10.1016/j.ijpe.2015.05.013
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    References listed on IDEAS

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    1. Peter J. Billington & John O. McClain & L. Joseph Thomas, 1983. "Mathematical Programming Approaches to Capacity-Constrained MRP Systems: Review, Formulation and Problem Reduction," Management Science, INFORMS, vol. 29(10), pages 1126-1141, October.
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    7. Louly, Mohamed-Aly & Dolgui, Alexandre, 2013. "Optimal MRP parameters for a single item inventory with random replenishment lead time, POQ policy and service level constraint," International Journal of Production Economics, Elsevier, vol. 143(1), pages 35-40.
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    Cited by:

    1. Haeussler, Stefan & Stefan, Matthias & Schneckenreither, Manuel & Onay, Anita, 2021. "The lead time updating trap: Analyzing human behavior in capacitated supply chains," International Journal of Production Economics, Elsevier, vol. 234(C).
    2. Alireza Pooya & Morteza Pakdaman, 2019. "Optimal control model for finite capacity continuous MRP with deteriorating items," Journal of Intelligent Manufacturing, Springer, vol. 30(5), pages 2203-2215, June.
    3. F. J. Arcelus & T. P. M. Pakkala & G. Srinivasan, 2018. "Inventory Replenishment for Profit Maximization over a Finite Horizon under One-time Cost Changes," Global Business Review, International Management Institute, vol. 19(3_suppl), pages 235-248, June.

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