Aligning Order Execution Priority with Customer Demand in DDMRP - an Assessment by Simulation

Demand-Driven Material Requirements Planning (DDMRP) aims at achieving high customer service levels and production system performance in variable, uncertain and complex demand and production environments. An important component of DDMRP that contributes to that is the priority execution of replenishment orders. For this, DDMRP uses the on-hand inventory or buffer penetration of each product. However, the performance advantage of the buffer penetration priority rule seems to be contingent. Previous studies assume that the buffer penetration value is assigned to a replenishment order at order generation and is not updated during production. So, the relative priority of generated orders does not change during execution. However, buffer penetration values can be continuously updated at each processing stage of the order, which means that the execution priority of orders can change and be related to the state of the buffers in real-time. In this study, simulation is used to evaluate and compare these two approaches to execution priority and compare their performance with that of the Net Flow Position rule. Under different manufacturing system settings, simulation experiments show performance advantage of using the real-time buffer information for execution priority.