The Coefficient of Variation as a Factor in MRP Research

This paper investigates the use of the coefficient of variation (CV) as a measure of requirements lumpiness (the amount of variation in requirements from period to period) in material requirements planning (MRP) research. CV is used as a factor in MRP research even though it is limited as a measure. Any sequence of requirements will have a unique CV, but any CV can represent a variety of requirements sequences. This limitation raises questions concerning the robustness of CV as a measure. In this paper, two other aspects of the requirements sequence for a given CV are investigated: the procedure used to generate the requirements and the manner in which the requirements are grouped. A simulation comparison of selected lot‐sizing techniques is used to conduct the investigation. With respect to these two (new) aspects of the requirements sequence, CV appears to be a robust measure.