Abstract
A stochastic material planning (SMP) model is developed to incorporate uncertainties in timing and amount in demand, and availability of correct parts when needed to satisfy production. SMP combines a master production schedule (MPS), which determines the optimal production schedule based on inventory, backorder, overtime and slack time costs. SMP uses the bill of material (BOM) to generate parts requirements for weekly production plan determined by MPS which is solved by mixed integer programming. The structure of the BOM is quite complex due to the number and type of variants, and timely use of SMP information assists in the ordering of stock to reduce the risk of delays in production due to stock outs. The SMP model is used to reduce this complexity and to improve the accuracy of a multi-product production plant. The SMP is based on and implemented in a truck production plant, is calculated in a MS-Access database.
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