On MRP Theory

Transform methods combined with Input-Output Analysis have been applied for the sake of formulating theoretical descriptions of Material Requirements Planning (MRP) and related formulations concerning divergent material flow systems (transportation, distribution) and systems encompassing recycling. The transform approach has had a fourfold use,

  • (i) it has been useful for describing time developments of the relevant production, demand and inventory properties in a compact way including effects of lead times,
  • (ii) the transform also captures stochastic properties when needed by functioning as a generating function,
  • (iii) it is easily applied for evaluating the resulting cash flows when adopting the Net Present Value principle, and
  • (iv) it can be used for evaluating risk preference functions with constant absolute risk aversion,

a combination having been applied in a variety of areas.

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