Demand Driven MRP with supplier selection

Abstract

Thanks to the globalization, and the large worldwide offer for supply, making the right choice would make a huge difference in terms of client satisfaction and cost minimization. This paper presents an optimized Demand Driven Material Requirements Planning (DDMRP) implementation scenario in a multi-echelon supply chain with guaranteed service, for a single product manufacturing process resourced by multiple suppliers. As required by the DDMRP method, a scenario where the demand is known over a planning horizon is considered. The lead times are deterministic. The raw materials and outsourced parts are delivered from a set of approved suppliers. The supplier selection process is coupled with the strategic buffer positioning and the buffer profiling in one model. This allows the decision maker to set the optimal inventory positioning with the best selected suppliers. Two non-linear MILP models are introduced and solved using CPLEX solver for multiple instances. The results provide an insight of the impact of the supplier selection on the DDMRP buffer positioning.