MRP under uncertainty: Safety Stock versus Safety Time

Abstract
The following work proposes the development and application of a materials planning model for the industry of refrigerating drinks. The model is applied to dependent demand in which a Material Requirements Planning (MRP) method is used. The materials planning model is a combination of basic sources of uncertainty that affects MRP system: demand and supply uncertainty. The appropriate values of key management parameters used to buffer against uncertainties, safety stock and safety time, are set according to the source of uncertainty. The model performance was tested for historic data and compared with real inventories levels.

1. Introduction
MRP has been proven effective for manufacturing planning and control, although managerial aspects can be improved to enhance the performance of MRP systems (X. Zhao et al., 1995).
One of the main advantages of an MRP approach is that inventory systems with dependent demand should not required safety stock below the end-item l...