Sage Journals: Discover world-class research

Abstract

This paper provides a methodology for managing safety and strategic stocks in materials requirements planning (MRP) environments to face uncertainty in market demand. A set of recommended guidelines suggest where to position, how to dimension and when to replenish both safety and strategic stocks. Trade-offs between stock positioning and dimensioning and between stock positioning and replenishment order triggering are outlined. The study reveals also that most of the decisions are system specific, so that they should be evaluated in a quantitative manner through simulation. A case study is reported, where the benefits from adopting the new proposed methodology lie in achieving the target service level even under peak demand conditions, with the value of safety stocks as a whole growing only by about 20 per cent.

Keywords

MRP inventory management variance control

References

Guide

V. D. R.

Srivastava

A review of techniques for buffering against uncertainty with MRP systems. Prod. Planning and Control, 2000, 11(3), 223–233.

Carter

P. L.

An investigation of alternative dampening procedures to cope with MRP systems nervousness. Int. J. Prod. Res., 1996, 34, 137–156.

Ireland

T. C.

A diagnostic analysis of the impact of forecast errors on production planning via MRP system nervousness. Prod. Planning and Control, 1993, 4, 311–322.

Law

W. K.

Rampal

Uncertaintydampening methods for reducing MRP system nervousness. Int. J. Prod. Res., 1995, 33, 483–496.

Portioli

Investigation on the impact of component commonality on MRP system nervousness. In Proceedings of International Conference on Industrial Engineering and Production Management, Lyon, France, October 1997, Vol. 1, pp. 315–325.

Johnston

F. R.

Boylan

J. E.

Forecasting for items with intermittent demand. J. Opl Res. Soc., 1996, 47, 113–121.

Salameh

M. K.

Buffer stock under the effect of fluctuating demand. Prod. Planning and Control, 1997, 8(1), 37–40.

Salameh

M. K.

Jaber

M. Y.

Reserve stock and transhipment in hierarchical inventory systems. Prod. Planning and Control, 1997, 8(5), 469–474.

Gupta

S. M.

Brennan

MRP systems under supply and process uncertainty in an integrated shop floor control environment. Int. J. Prod. Res., 1995, 33, 205–220.

10.

Murty

D. N. P.

MRP with uncertainty: A review and some extensions. Int. J. Prod. Econ., 1991, 25, 51–64.

11.

Hill

Production/Operations Management, 1991 (Prentice-Hall, New York).

12.

Orlicky

Materials Requirements Planning, 1975 (McGraw-Hill, New York).

13.

Brandolese

Cigolini

A new model for the strategic management of inventories subject to peaks in market demand. Int. J. Prod. Res., 1999, 37(8), 1859–1880.

14.

Bradford

J. W.

Sugrue

P. K.

Estimating the demand pattern for C category items. J. Opl Res. Soc., 1997, 48, 530–532.

Managing safety and strategic stocks to improve materials requirements planning performance

Abstract

Abstract

Keywords

References