Formulas of Revised MRP

Abstract

Information sharing among supply chain echelons is now an acquired result. As a consequence, most of the traditional techniques and procedures in production management must be revised and updated, exploiting the opportunities provided by new technologies. This paper presents an improved version of Material Requirement Planning procedure, which assumes information sharing capabilities and permits the creation of new business opportunities. In Orlicky's MRP, orders are computed considering the parent items gross requirements. On the contrary, here the order release procedure related to a certain item is computed both by exploiting all the information sharing advantages and by introducing a drastic innovation to the main process functioning. As a result, the proposed algorithm copes better with demand uncertainty, lowers the system nervousness and also removes the need for continuous forecast adjustments, thereby improving the ease in managing the material flow, allowing the development of new forms of collaboration among different supply chain partners and the creation of new business networks. The algorithm is presented in formulas to describe in detail each procedure step and calculations.