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Inventory Requirements Planning at Lucent Technologies

Author

Listed:
  • Alex Bangash

    (Rumson Capital Advisors, Princeton Corporate Center, 5 Independence Way, Suite 300, Princeton, New Jersey 08540)

  • Ramesh Bollapragada

    (Decision Sciences Department, College of Business, San Francisco State University, San Francisco, California 94132)

  • Rachelle Klein

    (147-34 70th Road, Flushing, New York 11367)

  • Narayan Raman

    (Lucent Technologies Bell Labs, 101 Crawfords Corner Road, Room 4L-463, Holmdel, New Jersey 07733)

  • Herbert B. Shulman

    (AT&T Corporation, 200 Laurel Avenue, Middletown, New Jersey 07748)

  • Donald R. Smith

    (Department of Management, Monmouth University, 400 Cedar Avenue, West Long Branch, New Jersey 07764-1898)

Abstract

The inventory requirements planning (IRP) system is a decision-support tool that Lucent has used to determine its buffering requirements for parts in a time-phased provisioning system. It measured the deviation of actual supply and demand from their planned values and, using the historical profile of these deviations, determined the safety-stock levels Lucent needed to meet the desired service levels. In doing so, it quantified the relationships among the inventory drivers: supply intervals, demand and supply variability, desired service levels, and part proliferation. It used these drivers to identify and drive initiatives to improve processes to reduce uncertainty in the provisioning process. Several Lucent locations have used the IRP system to realign inventories and to improve service in various manufacturing and distribution facilities. The IRP system's value has been recognized through several awards. It also contributed to Lucent's receiving the Malcolm Baldrige Award in 1992 (as a part of AT&T Corporation) and subsequently the INFORMS Prize in 1998.

Suggested Citation

  • Alex Bangash & Ramesh Bollapragada & Rachelle Klein & Narayan Raman & Herbert B. Shulman & Donald R. Smith, 2004. "Inventory Requirements Planning at Lucent Technologies," Interfaces, INFORMS, vol. 34(5), pages 342-352, October.
    • Handle: RePEc:inm:orinte:v:34:y:2004:i:5:p:342-352
    DOI: 10.1287/inte.1040.0093
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    References listed on IDEAS

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    1. T. S. Lee & Everett E. Adam, Jr., 1986. "Forecasting Error Evaluation in Material Requirements Planning (MRP) Production-Inventory Systems," Management Science, INFORMS, vol. 32(9), pages 1186-1205, September.
    2. Hau L. Lee & Corey Billington, 1993. "Material Management in Decentralized Supply Chains," Operations Research, INFORMS, vol. 41(5), pages 835-847, October.
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