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Less Nervous MRP Systems: A Dynamic Economic Lot-Sizing Approach

Author

Listed:
  • Robert C. Carlson

    (Stanford University)

  • James V. Jucker

    (Stanford University)

  • Dean H. Kropp

    (Dartmouth College)

Abstract

The Wagner-Whitin dynamic economic lot-sizing technique has not been widely applied to real-world production scheduling problems. A frequently quoted reason is the extreme sensitivity of the solution to changes in the estimates of future values of the problem's parameters, especially future demand. This "nervousness" has been of great concern to users of MRP (Material Requirements Planning) systems. A solution procedure which incorporates the cost of changing the current production schedule alleviates this nervousness by considering its economic effect. Thus updated parameter forecasts can be effectively used, and the schedule will be changed only when the joint consideration of setup, inventory holding, and schedule change costs indicates that it is economically beneficial to do so.

Suggested Citation

  • Robert C. Carlson & James V. Jucker & Dean H. Kropp, 1979. "Less Nervous MRP Systems: A Dynamic Economic Lot-Sizing Approach," Management Science, INFORMS, vol. 25(8), pages 754-761, August.
    • Handle: RePEc:inm:ormnsc:v:25:y:1979:i:8:p:754-761
    DOI: 10.1287/mnsc.25.8.754
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    Citations

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    Cited by:

    1. Shi Chen & Hau Lee & Kamran Moinzadeh, 2016. "Supply Chain Coordination with Multiple Shipments: The Optimal Inventory Subsidizing Contracts," Operations Research, INFORMS, vol. 64(6), pages 1320-1337, December.
    2. Kimms, A, 1998. "Stability Measures for Rolling Schedules with Applications to Capacity Expansion Planning, Master Production Scheduling, and Lot Sizing," Omega, Elsevier, vol. 26(3), pages 355-366, June.
    3. Charles, Mehdi & Dauzère-Pérès, Stéphane & Kedad-Sidhoum, Safia & Mazhoud, Issam, 2022. "Motivations and analysis of the capacitated lot-sizing problem with setup times and minimum and maximum ending inventories," European Journal of Operational Research, Elsevier, vol. 302(1), pages 203-220.
    4. Grubbstrom, Robert W. & Tang, Ou, 2000. "Modelling rescheduling activities in a multi-period production-inventory system," International Journal of Production Economics, Elsevier, vol. 68(2), pages 123-135, November.
    5. Friederike Wall, 2024. "Incomplete incentive contracts in complex task environments: an agent-based simulation with minimal intelligence agents," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 19(3), pages 523-552, July.
    6. Jian Yang & Xiangtong Qi & Gang Yu, 2005. "Disruption management in production planning," Naval Research Logistics (NRL), John Wiley & Sons, vol. 52(5), pages 420-442, August.
    7. Barba-Gutierrez, Y. & Adenso-Diaz, B. & Gupta, S.M., 2008. "Lot sizing in reverse MRP for scheduling disassembly," International Journal of Production Economics, Elsevier, vol. 111(2), pages 741-751, February.
    8. Qinyun Li & Stephen M. Disney, 2017. "Revisiting rescheduling: MRP nervousness and the bullwhip effect," International Journal of Production Research, Taylor & Francis Journals, vol. 55(7), pages 1992-2012, April.
    9. Awi Federgruen & Michal Tzur, 1996. "Detection of minimal forecast horizons in dynamic programs with multiple indicators of the future," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(2), pages 169-189, March.
    10. Zhao, Xiande & Lam, Kokin, 1997. "Lot-sizing rules and freezing the master production schedule in material requirements planning systems," International Journal of Production Economics, Elsevier, vol. 53(3), pages 281-305, December.
    11. Demirel, Edil & Özelkan, Ertunga C. & Lim, Churlzu, 2018. "Aggregate planning with Flexibility Requirements Profile," International Journal of Production Economics, Elsevier, vol. 202(C), pages 45-58.
    12. Salewski, Frank & Nissen, Rüdiger, 1993. "Revidierende hierarchische Planung: Ein Konzept am Beispiel der Personaleinsatzplanung in Wirtschaftsprüfungsgesellschaften," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 335, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    13. Amit Eynan & Meir J. Rosenblatt, 1995. "Assemble to order and assemble in advance in a single‐period stochastic environment," Naval Research Logistics (NRL), John Wiley & Sons, vol. 42(5), pages 861-872, August.
    14. Tarim, S. Armagan & Kingsman, Brian G., 2006. "Modelling and computing (Rn, Sn) policies for inventory systems with non-stationary stochastic demand," European Journal of Operational Research, Elsevier, vol. 174(1), pages 581-599, October.
    15. Tang, Ou & Grubbstrom, Robert W., 2002. "Planning and replanning the master production schedule under demand uncertainty," International Journal of Production Economics, Elsevier, vol. 78(3), pages 323-334, August.
    16. Sahin, Funda & Powell Robinson, E. & Gao, Li-Lian, 2008. "Master production scheduling policy and rolling schedules in a two-stage make-to-order supply chain," International Journal of Production Economics, Elsevier, vol. 115(2), pages 528-541, October.
    17. Wang, Kung-Jeng & Wee, Hui-Ming & Gao, Shin-Feng & Chung, Shen-Lian, 2005. "Production and inventory control with chaotic demands," Omega, Elsevier, vol. 33(2), pages 97-106, April.
    18. Salewski, Frank, 1994. "An integrative approach to audit-staff scheduling," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 358, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    19. Chakravarty, Amiya K. & Balakrishnan, Nagraj, 1998. "Reacting in real-time to production contingencies in a capacitated flexible cell," European Journal of Operational Research, Elsevier, vol. 110(1), pages 1-19, October.
    20. Moon, Ilkyeong & Choi, Sangjin, 1997. "Distribution free procedures for make-to-order (MTO), make-in-advance (MIA), and composite policies," International Journal of Production Economics, Elsevier, vol. 48(1), pages 21-28, January.
    21. Carlos Herrera & Sana Belmokhtar-Berraf & André Thomas & Víctor Parada, 2016. "A reactive decision-making approach to reduce instability in a master production schedule," International Journal of Production Research, Taylor & Francis Journals, vol. 54(8), pages 2394-2404, April.
    22. Gaafar, Lotfi K. & Choueiki, M. Hisham, 2000. "A neural network model for solving the lot-sizing problem," Omega, Elsevier, vol. 28(2), pages 175-184, April.

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