A theory of material requirements planning (MRP): an empirical methodology to reduce uncertainty in MRP systems

This paper presents a theoretical MRP‡ model which includes both demand and supply uncertainties from quantity and timing variations. The model suggests empirical methodologies to estimate the variances of final outputs and components for estimates of safety stock requirements to reduce uncertainty. The paper suggests methodology for safety stock estimates to alleviate demand uncertainty for trade-to-stock organizations and made-to-order organizations. The paper also suggests methodologies to estimate safety stock for the production systems to alleviate supply uncertainty.