  In many supply chains, the current efforts at digitalization have led to
improved information exchanges between manufacturers and their customers.
Specifically, demand forecasts are often provided by the customers and
regularly updated as the related customer information improves. In this paper,
we investigate the influence of forecast updates on the production planning
method of Material Requirements Planning (MRP). A simulation study was carried
out to assess how updates in information affect the setting of planning
parameters in a rolling horizon MRP planned production system. An intuitive
result is that information updates lead to disturbances in the production
orders for the MRP standard, and, therefore, an extension for MRP to mitigate
these effects is developed. A large numerical simulation experiment shows that
the MRP safety stock exploitation heuristic, that has been developed, leads to
significantly improved results as far as inventory and backorder costs are
concerned. An interesting result is that the fixed-order-quantity lotsizing
policy performs - in most instances - better than the fixed-order-period
lotsizing policy, when periodic forecast updates occur. In addition, the
simulation study shows that underestimating demand is marginally more costly
than overestimating it, based on the comparative analysis of all instances.
Furthermore, the results indicate that the MRP safety stock exploitation
heuristic can mitigate the negative effects of biased forecasts.
