Optimal time phasing and periodicity for MRP with POQ policy

Abstract

This paper deals with component supply planning for assembly systems where several types of components are ordered from external suppliers to produce a single type of finished product. Actual component lead times are often different from those contracted because of random delays. An MRP approach with periodic order quantity (POQ) policy is used for the supply planning of components. Our aim is to find the optimal values of the order periodicity and planned lead times at the offsetting step of the MRP procedure. The goal is to minimise the sum of the average component holding, finished product backlogging and setup costs. Several theoretical properties of the objective function are proven and an efficient optimization algorithm is developed. The proofs of the explicit form and properties of the objective function as well as the development of the optimization algorithm occupy a large portion of this paper. The method developed can be used for the optimization of time phasing and periodicity for such an MRP system under lead time uncertainties.