MRP IN AN UNCERTAIN ENVIRONMENT

1
MRP IN AN UNCERTAIN ENVIRONMENT

• Sources of Uncertainty
• Safety Stock
• Safety Lead Time

2
SOURCES OF UNCERTAINTY

• Uncertainty may necessitate carrying higher
  inventory levels
• Quantity uncertainty
• Changes in supply (scheduled receipts)
• Changes in demand (gross requirements)
• Timing uncertainty
• Changes in supply (scheduled receipts)
• Changes in demand (gross requirements)

3
SAFETY STOCK

• Guards against quantity uncertainty
• Reorder when inventory drops below the desired
  safety stock level
• SS -- safety stock level
• PAB -- projected available balance
• If SS 0, reorder when PAB lt 0
• If SS gt 0, reorder when PAB lt SS

4
SAFETY STOCK

• Consider the following MRP record for a part
  without safety stock or safety lead time
• Remember EOQ 50, LT 1 period
• What if we decided to set SS 10?

5
SAFETY STOCK

• Recalculating the record, we drop to the SS in
  period 1

6
SAFETY STOCK

• In period 2, we are 10 units below SS, so we have
  net requirements of 10

7
SAFETY STOCK

• In period 2, we are 10 units below SS, so we have
  net requirements of 10
• This generates an order to be released in period 1

8
SAFETY STOCK

• The remaining periods are processed in the same
  manner

9
SAFETY STOCK

• The remaining periods are processed in the same
  manner

10
SAFETY LEAD TIME

• Guards against timing uncertainty
• Reorder before inventory is depleted
• Not just inflated lead time 
• SLT -- safety lead time
• Reorder when PAB lt 0, but offset planned order
  receipt from net requirements by SLT
• Requires recalculation of PAB after planned order
  releases determined

11
SAFETY LEAD TIME

• Consider the original MRP record without safety
  stock or safety lead time once more
• Remember EOQ 50, LT 1 period
• What if we decided to set SLT 1 period?

12
SAFETY LEAD TIME

• As without SLT, no net requirements are now
  generated until period 3

13
SAFETY LEAD TIME

• As without SLT, no net requirements are now
  generated until period 3
• But the planner order receipt is offset by the
  SLT 1 period to buffer against the unreliable
  lead time

14
SAFETY LEAD TIME

• As without SLT, no net requirements are now
  generated until period 3
• But the planner order receipt is offset by the
  SLT 1 period to buffer against the unreliable
  lead time
• The planned order release is then offset by the
  LT 1 period from the planned order receipt (as
  usual)

15
SAFETY LEAD TIME

• The net requirements in period 4 . . .

16
SAFETY LEAD TIME

• The net requirements in period 4 . . .
• Generates a planned order receipt in period 3 . .
  .

17
SAFETY LEAD TIME

• The net requirements in period 4 . . .
• Generates a planned order receipt in period 3 . .
  .
• And a planned order release in period 2

18
SAFETY LEAD TIME

• One more net requirement is generated in period 6