Further developments on safety stocks in an MRP system applying Laplace transforms and input-output analysis

Article Abstract:

The properties of a safety stock for demand in a material requirements planning (MRP) system following a renewal process are analyzed using the Laplace transforms and input-output methods. The optimal safety stock is considered in the case in which the time interval of demand is Gamma-distributed. It is shown that the multilevel production-inventory system can be described using the generalized Leontief inverse when the subordinate products are manufactured according to a lot-for-lot framework.

Production Management, Usage, Input-output analysis, Laplace transformation

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A net present value approach to safety stocks in a multi-level MRP system

Article Abstract:

A study was conducted to extend the analysis of obtaining optimal safety stock levels in material requirements planning systems to a multi-level system supporting production that takes place based on a lot-for-lot policy. The production correlates with the application of the net present value as the objective criterion and a disregard of opportunities for joint set-up. Findings indicated the applicability of single-level results in multi-level cases during a lot-for-lot policy.

Management, Planning, Production planning

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Safety production plans in MRP-systems using transform methodology

Article Abstract:

A model is developed for calculating optimal safety stock values in material requirements planning systems. The model considers end-items as individual random events separated by independent time intervals. It is shown that a high cost ratio between the backorder cost and inventory holding cost leads to increased demand uncertainty over time, thereby encouraging compensation in the form of increased safety stock.

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