An Analysis of Scheduling Policies In Multiechelon Production Systems

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Abstract
Results of a simulation study of the economics of frequency of rescheduling Material Requirements Planning (MRP) systems are presented for a single-product, two-stage system in which demand is uncertain. The results indicate that for systems with moderate demand uncertainty, frequent rescheduling to maintain customer service may be uneconomical when compared with the alternative of more stable schedules in conjunction with safety stock. This result arises primarily because the cost of “emergency” production setups which occur when rescheduling is frequent exceeds the cost of safety stock required to “protect” stable schedules.