Abstract for: System Dynamics Simulation of the Effects of the DDMRP Implementation.

The present research aims to investigate the effects on the inventory of adopting a Demand Driven MRP (DDMRP) approach. Proposed in 2010 by Ptak and Smith, DDMRP is an emerging inventory management strategy focused on decoupling points represented by material buffers placed in strategically selected positions of the BOM, so as to protect against the Bullwhip Effect propagation. A System Dynamics model is developed by building on the model of a manufacturing supply chain (SC) proposed by Sterman in the early 2000s and adapting it to include the DDMRP logic based on the observation of a real company currently implementing this approach. Two validations are performed. First, the model output without DDMRP application is tested against Sterman’s model, in order to make sure the main inventory dynamics and feedback loops are caught. Second, the model outcomes when DDMRP is implemented are validated by using the numerical dataset provided by the Demand Driven Institute. DDMRP performances against traditional inventory management policies are benchmarked and the dynamic causes behind the concurrent generation of excess and shortages, typical of many production contexts, are derived and explained. Future research will be devoted to testing the model in real manufacturing environments.