Effective production planning for purchased part under long lead time and uncertain demand: MRP Vs demand-driven MRP

Abstract

MRP as a production planning system is appropriate for the deterministic environment. Unfortunately, most production systems such as customer demands are stochastic, so that MRP is inappropriate at the time. Demand-Driven MRP (DDMRP) is new approach for production planning system dealing with demand uncertainty. The objective of this paper is to compare the MRP and DDMRP for purchased part under long lead time and uncertain demand in terms of average inventory levels. The evaluation is conducted through a discrete event simulation with the long lead time and uncertain demand scenarios. The next step is evaluating the performance of DDMRP by comparing the inventory level of DDMRP with MRP. As result, DDMRP is more effective production planning than MRP in terms of average inventory levels.