Material requirements planning (MRP) and purchase discounts

W.C. Benton · D. Clay Whybark

51 citations0/0 files storedJournal of Operations Management

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Supply Chain and Inventory Management Management and Optimization Techniques Scheduling and Optimization Algorithms

Abstract

Abstract This paper reports the results of a simulation experiment that compares alternative procedures for determining purchase quantities in MRP systems when quantity discounts are available. The procedures are least unit cost (LUC), McLaren's order moment (MOM) and a “traditional” procedure that ignores the time‐phased information available from an MRP system. One of the factors in the experiment was requirement uncertainty, a factor heretofore not incorporated in MRP lot‐sizing research. The results of the experiment confirm MOM (and to a lesser extent LUC) as an effective lot‐sizing procedure. In addition, the work shows that the differences between the procedures tend to vanish as the amount of uncertainty in the requirements increases.

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1991Production and Operations Management

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2018Demand Driven MRP: assessment of a new approach to materials management 1989The behavior of lot‐sizing procedures in the presence of forecast errors 2016A dynamic marketing-operations interface model of new product updates 2008An efficient optimal algorithm for the quantity discount problem in material requirement planning 2003Evaluating jointly constrained order quantity complexities for incremental discounts 2024Impact of inventory management practices on the operational performances of SMEs: review and future research directions 1987An optimal algorithm for the quantity discount problem 1985Multiple price breaks and alternative purchase lot-sizing procedures in material requirements planning systems

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