Designing an Extended Inventory Model in the Supply Chain with Material Requirements Planning and Supplier Selection

Document Type : Research Paper

Authors

1 PHD student, Department of Industrial Management, Qazvin Branch, Islamic Azad University, Qazvin, Iran.

2 Assistant Professor, Department of Industrial Management, Qazvin Branch, Islamic Azad University, Qazvin, Iran

Abstract

Material Requirements Planning (MRP) is a priority planning method that calculates the materials needed to meet the demand for all products and parts in one or more parts of the factory. Because choosing the right supplier for the organization brings significant savings, the most important activity of the buying operation is choosing the right supplier. The aim of this study is to design an extended inventory model to identify and Supplier Selection and Material Requirements Planning in the supply chain. For this purpose, an inventory system including the main parameters of initial inventory level, defect rate and decision when supply shortage was designed. Then the distribution model was designed for the relationship between the inventories of supply chain units and distributors. After modeling the demand for each supply chain unit, the inventory model was performed to Material Requirements Planning and Supplier Selection based on dynamic simulation for the supply chain. Material Requirements Planning was then sensitized based on changes in demand and changes in production capacity and changes in inventory and finally suppliers were selected. The results showed that with increasing demand, the cost of new raw materials also increases. Also, at 80% of the base production capacity, the Material Requirements Planning is unworkable and is not able to meet the basic demand. Reduced capacity leads to high inventory costs. With 110 and 120% of base capacity, there was a reduction in production costs. Also, with high initial inventory, a decrease in total costs was observed, and in 120% of the basic initial inventory, although inventory costs increased, the cost of new raw materials decreased significantly. Also, the sensitivity for selecting a supplier to the fixed cost parameter of ordering from the supplier is less than other cost parameters

Keywords

References

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Journal of Industrial Engineering Research in Production Systems
Volume 9, Issue 19
February 2022
Pages 71-93

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