Observations on Material Flow in Supply Chains

This paper summarizes one group of recent simulation studies comparing replenishment strategies. Time-phased planning, implemented using DRP and MRP logic, continuous-review reorder point (ROP) and single-card Kanban (KBN) systems are considered. These differ in terms of decision-making information, logic and integration requirements. Experimental results have been statistically analyzed and explained using simple stochastic models. Steps have also been taken to evaluate which strategies are most suitable under various demand patterns, levels of uncertainty and capacity constraints. Results show that DRP/MRP is superior under time-varying demand, regardless of whether or not capacity constraints are present. With no capacity constraints and level demand, ROP is superior to KBN, in part because it considers backorder information. With capacity constraints behavior is complicated by queuing effects. Under level demand, KBN may slightly outperform ROP, given assumptions of equal lot sizes, order placement delays and transportation times