The Integration of Cost and Capacity Considerations in Material Requirements Planning Systems

ABSTRACT Within the sequential framework of material requirements planning (MRP), a master production schedule (MPS) of end‐item production is prepared and a bill‐of‐material processor is used to convert the MPS into a plan for needed subassemblies, parts, and materials. This study examines the impa...

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Bibliographic Details
Published in:Decision sciences 1990-09, Vol.21 (3), p.507-520
Main Authors: Veral, Emre A., LaForge, R. Lawrence
Format: Article
Language:English
Subjects:
Capacity Planning
Carrying costs
Cost structure
Costs
Effects
Inventory Management
Management science
Material Requirements Planning
Multivariate analysis
Production capacity
Production planning
Production scheduling
Studies
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Summary:ABSTRACT Within the sequential framework of material requirements planning (MRP), a master production schedule (MPS) of end‐item production is prepared and a bill‐of‐material processor is used to convert the MPS into a plan for needed subassemblies, parts, and materials. This study examines the impact of different procedures for considering inventory‐related costs and capacity limitations in the two phases of planning: master production scheduling and bill‐of‐material (BOM) processing. A total of nine procedures are considered for integrating the two phases of planning. The results indicate that the integrated procedures have a significant effect on the trade‐offs among inventory‐related costs, work load variations, over/under time costs, and excess work loads. Further, the results suggest that the method used to develop the MPS has the primary influence on these trade‐offs, but the method used by the BOM processor can sometimes have a moderating effect.
ISSN:0011-7315
1540-5915
DOI:10.1111/j.1540-5915.1990.tb00330.x