Planning and replanning the master production schedule under demand uncertainty

The Master Production Schedule (MPS) is essential in maintaining customer service levels and stabilising production planning in a Material Requirements Planning (MRP) environment. Traditionally, an MPS is derived from a demand forecast and aggregate production plan but the associated cost to cover demand uncertainty is usually not considered. Another difficulty in the MPS is its planning frequency. Frequent changes in the MPS reduce productivity whereas a long-term frozen MPS results in a poor service level and an unfavourable inventory situation. This paper first investigates the possibility to establish a method for planning the MPS under stochastic demand. Secondly, it aims to evaluate the value of replanning actions. Finally, it provides a model for estimating appropriate MPS parameters such as the length of the replanning interval and the length of the interval to freeze the plan. (C) 2002 Elsevier Science B.V. All rights reserved.