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A Comparison of Strategies to Dampen Nervousness in MRP Systems

Author

Listed:
  • Joseph D. Blackburn

    (Owen Graduate School of Management, Vanderbilt University, Nashville, Tennessee 37203)

  • Dean H. Kropp

    (Amos Tuck School, Dartmouth College, Hanover, New Hampshire 03755)

  • Robert A. Millen

    (College of Business Administration, Northeastern University, Boston, Massachusetts 02115)

Abstract

This research examines the effectiveness of alternative strategies for dealing with the problem of order instability, or nervousness, which occurs in Material Requirements Planning systems. Nervousness can be particularly disruptive in multi-level production processes where a change in order size or timing at one level can result in changes at other levels. This study proposes and evaluates five different strategies for treating nervousness caused by the interaction of lot-sizing decisions and the planning horizon. Not evaluated here are the effects on order instability caused by demand uncertainty or supply and lead-time uncertainty. The five strategies examined are: (1) Freezing the schedule within the planning horizon, (2) Lot-for-Lot after stage 1, (3) Safety stocks, (4) Forecast beyond the planning horizon, and (5) Change cost procedure. A series of simulation experiments was conducted to test the effectiveness of the five strategies on schedule stability and system costs. The experiments were constructed to evaluate the impacts of various lot-sizing methods, the length of the planning horizon, setup and holding cost parameters and product assembly structure. The results indicate that when the source of nervousness is due to changes in decisions caused by a rolling planning horizon, safety stock and lot-for-lot approaches are not cost effective. Under most conditions, the strategies of incorporating a change cost to discourage schedule changes or freezing the schedule within the planning horizon appear to be dominant.

Suggested Citation

  • Joseph D. Blackburn & Dean H. Kropp & Robert A. Millen, 1986. "A Comparison of Strategies to Dampen Nervousness in MRP Systems," Management Science, INFORMS, vol. 32(4), pages 413-429, April.
  • Handle: RePEc:inm:ormnsc:v:32:y:1986:i:4:p:413-429
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    File URL: http://dx.doi.org/10.1287/mnsc.32.4.413
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    Cited by:

    1. de Kok, Ton & Inderfurth, Karl, 1997. "Nervousness in inventory management: Comparison of basic control rules," European Journal of Operational Research, Elsevier, vol. 103(1), pages 55-82, November.
    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. Sivadasan, Suja & Smart, Janet & Huaccho Huatuco, Luisa & Calinescu, Anisoara, 2013. "Reducing schedule instability by identifying and omitting complexity-adding information flows at the supplier–customer interface," International Journal of Production Economics, Elsevier, vol. 145(1), pages 253-262.
    4. Tunc, Huseyin & Kilic, Onur A. & Tarim, S. Armagan & Eksioglu, Burak, 2013. "A simple approach for assessing the cost of system nervousness," International Journal of Production Economics, Elsevier, vol. 141(2), pages 619-625.
    5. 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.
    6. Wijngaard, J., 2004. "The effect of foreknowledge of demand in case of a restricted capacity: The single-stage, single-product case," European Journal of Operational Research, Elsevier, vol. 159(1), pages 95-109, November.
    7. Özen, Ulaş & Doğru, Mustafa K. & Armagan Tarim, S., 2012. "Static-dynamic uncertainty strategy for a single-item stochastic inventory control problem," Omega, Elsevier, vol. 40(3), pages 348-357.
    8. 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.
    9. Ghobbar, Adel A. & Friend, Chris H., 2004. "The material requirements planning system for aircraft maintenance and inventory control: a note," Journal of Air Transport Management, Elsevier, vol. 10(3), pages 217-221.
    10. Erenguc, S. Selcuk & Simpson, N. C. & Vakharia, Asoo J., 1999. "Integrated production/distribution planning in supply chains: An invited review," European Journal of Operational Research, Elsevier, vol. 115(2), pages 219-236, June.
    11. Heisig, Gerald, 2001. "Comparison of (s,S) and (s,nQ) inventory control rules with respect to planning stability," International Journal of Production Economics, Elsevier, vol. 73(1), pages 59-82, August.
    12. 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.
    13. 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.
    14. 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.
    15. Kilic, Onur A. & Tarim, S. Armagan, 2011. "An investigation of setup instability in non-stationary stochastic inventory systems," International Journal of Production Economics, Elsevier, vol. 133(1), pages 286-292, September.
    16. Clark, Alistair R., 2003. "Optimization approximations for capacity constrained material requirements planning," International Journal of Production Economics, Elsevier, vol. 84(2), pages 115-131, May.
    17. Simpson, N. C., 1999. "Multiple level production planning in rolling horizon assembly environments," European Journal of Operational Research, Elsevier, vol. 114(1), pages 15-28, April.
    18. Xie, Jinxing & Zhao, Xiande & Lee, T. S., 2003. "Freezing the master production schedule under single resource constraint and demand uncertainty," International Journal of Production Economics, Elsevier, vol. 83(1), pages 65-84, January.
    19. Daniel Thiel, 1998. "Mise en évidence de l'instabilité des modèles de réapprovisionnement continu par une analyse dynamique des systèmes logistiques," Économie rurale, Programme National Persée, vol. 245(1), pages 56-68.
    20. van Donselaar, K. & van den Nieuwenhof, J. & Visschers, J., 2000. "The impact of material coordination concepts on planning stability in supply chains," International Journal of Production Economics, Elsevier, vol. 68(2), pages 169-176, November.
    21. Narayanan, Arunachalam & Robinson, Powell, 2010. "Evaluation of joint replenishment lot-sizing procedures in rolling horizon planning systems," International Journal of Production Economics, Elsevier, vol. 127(1), pages 85-94, September.
    22. 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.

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