Less Nervous MRP Systems: A Dynamic Economic Lot-Sizing Approach

Abstract

The Wagner-Whitin dynamic economic lot-sizing technique has not been widely applied to real-world production scheduling problems. A frequently quoted reason is the extreme sensitivity of the solution to changes in the estimates of future values of the problem's parameters, especially future demand. This "nervousness" has been of great concern to users of MRP (Material Requirements Planning) systems. A solution procedure which incorporates the cost of changing the current production schedule alleviates this nervousness by considering its economic effect. Thus updated parameter forecasts can be effectively used, and the schedule will be changed only when the joint consideration of setup, inventory holding, and schedule change costs indicates that it is economically beneficial to do so.material requirements planning, material requirements planning: lot sizing

A reactive decision-making approach to reduce instability in a master production schedule

“…Nervousness is defined as a characteristic in a master resource planning (MRP) system when minor changes in higher level records or the master production schedule (MPS) cause significant timing or quantity changes in lower level schedules and orders (de Kok and Inderfurth 1997;Heisig and Fleischmann 2001). Alternatively, nervousness also can be defined as a shifting of the scheduled set-ups (Carlson, Jucker, and Kropp 1979) or as a set of changes in setting up the orders (Blackburn, Kropp, and Millen 1986;Ho 1989). A rolling horizon is used to adjust the MPS to the demand forecast by minimising inventory costs with respect to delivery dates.…”

An improved metric for measuring multi-item multi-level schedule instability under rolling schedules

“…He suggested using a fixed EOQ or a Lot-for Lot scheduling rule in order to alleviate the effects of nervousness. Then, Carlson et al (1979) used a modified Wagner-Whitin algorithm to mitigate nervousness including schedule change costs. They developed their model without restrictions on cost function and including the cost of cancelled setups (Kropp & Carlson, 1984).…”

“…Nervousness in scheduling systems has been defined in several ways as shifting of scheduled setups (Carlson, Jucker, & Kropp, 1979), instability in setup orders (Blackburn, Kropp, & Millen, 1986) or in a more general way 'instability in planned orders, excessive rescheduling of open orders, or the negative effect of open-order rescheduling' (Ho, 1989). The results are that shop cannot carry the master production schedule out; capacity utilization and customer service levels decrease, throughput times and costs of inventories increase (Heisig, 2002;Sridharan, Berry, & Udayabhanu, 1988).…”

Replanning working time under annualised working hours

“…those dealing with production) between the initial plan and the replanned one are allowed to vary by a certain percentage above or below the value in the former. Carlson et al (1979) presented a time-dependent function of the costs associated with the changes between plans. It encompasses an initial period, in which the cost is infinite (which coincides with the period of rigidity, since no changes can be made); intermediate periods, in which the cost is a non-increasing, time-dependent function; and final periods, in which the cost is zero.…”