Revisiting rescheduling: MRP nervousness and the bullwhip effect

Abstract

We study the material requirement planning (MRP) system nervousness problem from a dynamic, stochastic and economic perspective in a two-echelon supply chain under first order auto-regressive demand. MRP nervousness is an effect where the future order forecasts, given to suppliers so that they may plan production and organize their affairs, exhibits extreme period-to-period variability. We develop a measure of nervousness that weights future forecast errors geometrically over time. Near-term forecast errors are weighted higher than distant forecast errors. Focusing on replenishment policies for high volume items, we investigate two methods of generating order call-offs and two methods of creating order forecasts. For order calloffs, we consider the traditional order-up-to (OUT) policy and the proportional OUT policy (POUT). For order forecasts, we study both minimum mean square error (MMSE) forecasts of the demand process and MMSE forecasts coupled with a procedure that accounts for the known future influence of the POUT policy. We show that when retailers use the POUT policy and account for its predictable future behavior, they can reduce the bullwhip effect, supply chain inventory costs and the manufacturer's MRP nervousness.

Applying machine learning to the dynamic selection of replenishment policies in fast-changing supply chain environments

“…Depending on the value of the controller, this policy allows modeling a wide range of realworld replenishment strategies (Li and Disney 2017). The smaller , the less sensitive the order to the inventory gaps.…”

Coordination Mechanism of Supply Chain considering the Bullwhip Effect under Digital Technologies

“…Kochan et al [49] also proposed that cloud computing can improve supply chain performance by reducing the BWE. e proportional order-up-to policy can alleviate the BWE and demand uncertainty [50]. Keshari et al [51] proved that optimal multiple order-up-to policy-based inventory replenishment scheme could alleviate the BWE.…”

“…However, its scope of application is relatively narrow, and the performance improvement after coordination is not perfect. 250) 600 (300) 100 (50) The impact of the BWE α (α1)…”

OVAP: A strategy to implement partial information sharing among supply chain retailers

“…-Ordering policy. SC members use an adaptive (R,S) periodic review policy (Babai et al 2016, Li and Disney 2017, Li et al 2014, Syntetos et al 2016a, Zhou et al 2017b, where R is the review period. S is the desired OUT level, and it is updated in every period.…”