Supply Chain Inventory Control: A Comparison Among JIT, MRP, and MRP With Information Sharing Using Simulation

Abstract: Logistics or supply chains play a central role in effective management. Inventory control systems play a significant role in managing supply chains. This article provides engineering managers with guidelines to choose a cost-effective supply chain inventory control system through analyzing push inventory systems (MRP), and pull systems (JIT). Simulation modeling was used to build and analyze the supply chains with stationary and cyclical demand patterns. The article indicates the main variables that should concern the engineering manager to choose between MRP and JIT. The paper concludes that because JIT reduces the holding cost, it becomes a more cost-effective system at a wider range as the demand level increases. The results also show that when information is shared across a supply chain that implements a MRP system, the cost reduction is significant in comparison with no information sharing especially under cyclical and highly variable demand patterns.

Keywords: Supply Chain Management, Inventory Control, Just-In-Time, MRP, Simulation.

EMJ Focus Areas: Operations Management, Quantitative Methods & Models

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