Improving Performance Evaluation in DRP Systems

        Distribution Resource Planning (DRP) is a general framework for planning and managing inventory in distribution networks. The DRP framework can be applied to complex distribution networks with thousands of unique stock-keeping units (SKUs) and hundreds of stocking locations. It allows for non-stationary (e.g. seasonal) demand patterns and a wide variety of user-specified inventory control rules including all standard inventory policies such as $(S,s)$ and fixed order quantity rules. A number of software implementations of DRP are commercially available and are widely used in industry. In this paper, we describe the logic underlying DRP and point out some its limitations. In particular, we show how the performance evaluation capability of DRP can be substantially enhanced by some simple analytical formulas, derived as approximations from base-stock and $(S,s)$ control schemes.

By: Gerald E. Feigin, Kaan Katircioglu and David D. Yao

Published in: RC20942 in 1997


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