A simulation study of MRP capacity planning with uncertain operation times

Abstract

This paper studies the effect of uncertainty on capacity planning in MRP. Two sources of uncertainty are inherent in any capacity planning: (1) fluctuation in product demand and (2) variation in operation work contents. Through the use of computer simulation, experiments are performed on actual operating data supplied by an electronics company. It is found that the accuracy of a capacity plan is approximately a quadratic function of the level of variation in operation work contents and is significantly affected by product demand fluctuation. Theoretical treatment of the data yields the same conclusion, thus suggesting the validity of the simulation results. In view of these findings, the management is advised to exercise close control on the sources of variation so that acceptable accuracy can be achieved in determining a feasible production schedule.