Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

12.3.2b Comparing the Effects of MRP and Order Point

Intended learning outcomes: Disclose the possible benefit of the net change MRP technique. Evaluate the effects of the MRP technique compared to the order-point technique.

Continuation from previous subsection (12.3.2)

If the independent demand changes only slightly, the net change MRP technique is usually faster. This technique attempts to consider only those net requirements that have changed. The four-step procedure is applied only to those articles whose projected available inventory has changed since the last MRP run. If planned production orders are changed, this will also affect the dependent demands for components, so that the MRP procedure must be repeated for each component. If a large number of items are affected, the entire order network will have to be recalculated — effectively a comprehensive rerun of the MRP algorithm.

Exercise: Compare the effects of the MRP technique compared to the order-point technique by choosing different values for the parameters as well as the monthly gross requirements.

Course section 12.3: Subsections and their intended learning outcomes