Abstract
In MRP priority calculation, a lead time is estimated as an integral multiple of a time bucket. However, real lead-time itself is distributed over a certain range and it is difficult to select the appropriate value. A theoretically calculated value of lead-time (which generally is a lower limit) can be used as a reference with some buffer lead-time value for further estimation in MRP. For a given time bucket length, if the time bucket value is near to the next time bucket value, lead-time value will lead to over-stocking. However, if the estimated lead-time value is near to the first time bucket value it may lead to insufficient stock. This paper analyses the MRP system's behavior in such an environment. It has been assumed that there is always a system inventory, which is known from other data such as demand rate, lead-time length and safety stock. This study focuses on the role of lead-time and safety stock as the parameters for the purpose of reducing on-hand inventory levels under the condition which no shortage of products occurs. Several simulation studies are conducted to find an effective value of lead-time by varying the safety stock value in steps and checking the inventory levels at the end of each time bucket. The results of this study may be useful in controlling the value of lead-time and safety stock, thus maintaining low inventory levels in MRP systems.
