Inventory Buffers in DDMRP: A Simulation Study of the Review Policy

Demand-Driven Material Requirements (DDMRP) is a novel approach to manage the flows of material and information in production environments of high product variety, small orders, short lead times, and rapidly changing demand. This paper aims to improve the understanding of the DDMRP system by analyzing the review policy used at inventory buffers. Inventory buffers refer to inventory of final products or components strategically positioned in the supply chain to offer availability for stock consumption. More specifically the study provides an insight into the impact of both, the review policy used at order generation and the priority dispatching rule used at order execution, on the performance of DDMRP system. Results of a simulation study led us to conclude that continuous buffer assessment for order generation outperforms periodic buffer assessment. However, performance differences depend on the priority dispatching rule used for order execution, namely whether a static or dynamic dispatching rule is in place.