MRP vs.

Demand-Driven MRP: Towards an

Objective Comparison
(Presented at the 6th IESM Conference, October 2015, Seville, Spain) I4e2 2015

Romain Miclo1,2, Franck Fontanili 2, Matthieu Lauras 2, Jacques Lamothe 2, Bernard Milian 1
1
AGILEA S.A.S.
9 rue Michel Labrousse, 31100 Toulouse, France
2
Industrial Engineering Department, University of Toulouse Mines Albi
Route de Teillet, 81000 Albi, France
Email: romain.miclo@mines-albi.fr

Abstract The Demand-Driven MRP (DDMRP) is a
recent method focusing on manufacturing and distribution
flows that is supposed to manage uncertainties better than
traditional Manufacturing Resources Planning (MRP).
Nevertheless, this assertion has never been scientifically
demonstrated. In this paper, a case study is investigated in
order to objectively and quantitatively compare these two
systems. A Discrete-Event Simulation (DES) approach is used
to evaluate the impacts on systems behaviours regarding both
management methods. The final goal of our work research is
to objectivise the reality of the DDMRP benefits.
KeywordsFlow management; MRPII; Demand-Driven
MRP; Discrete-Event Simulation.
I. Introduction and Research Statement
Satisfying customers is companies main purpose. In order
to achieve this goal, they must perfectly manage their flows
and deliver their products on time. In order to always deliver
on time, lots of companies significantly raise their Work In
Progress (WIP). However this WIP costs a lot of money. That
is why the second goal is also to minimise the WIP amount all
along the process. This second objective is even more relevant
given the worldwide economic crisis.
To manage physical or economical flows lots of methods
are known. Manufacturing Resource Planning (MRPII) is one
of the well-known method [1] and the most followed in the
world. Other methods, pull flow management (production
depends on the real consumption, the real demand) are also
widespread. The main pull flow policies are Kanban that is a
subsystem of the Toyota Production System (TPS) [2] and
ConWIP (Constraint Work In Progress) [3] that aims at
managing the total amount of WIP in the process.
Another recent and promising method is Demand-Driven
Material Requirements Planning (DDMRP) [4]. DDMRP is a
multi-echelon demand and supply planning and execution
methodology. It is developing since 2000 and is already set
up in numerous companies in the United States. Furthermore it
is spreading in Europe and Asia and generates an increasing
interest of industrial managers. Its main originalities are in the
strategic DDMRP buffer positioning, dimensioning and
replenishment so that the different sources of variability (from
supply, operational, demand and management) can be
managed. Therefore, DDMRP is recognised as a right solution
by combining best practices of MRPII [1], Lean [5], Theory
Of Constraints (TOC) [6], Distribution Resource Planning [7],
6 sigma [8] and with some innovations. DDMRP highlights
MRP and Lean deficiencies. It is a promising method but there
is no scientific comparison to objectively demonstrate the
differences between managing flow with DDMRP or MRPII
and other pulling methods such as Kanban or ConWIP.
We can therefore formulate two research statements (RS)
as follows:
RS1. What are the main DDMRP contributions compared
with other management flow policy?
RS2. Are there underlying hypothesis for the
implementation of DDMRP?
This paper focuses on the comparison with the classical
MRPII and is organised as follows. A literature review is used
to identify potential DDMRP contributions. Then, a case study
is introduced to evaluate DDMRP compared to MRP.
II. Literature review
A. Manufacturing Resource Planning (MRPII)
Manufacturing Resource Planning (MRPII) is the most
widespread planning method in the world. MRP and then
MRPII were developed in the 1970s. It requires demand
forecasts and plans all the manufacturing activities: it is a push
flow method.
MRPII is a method for the effective planning of all
resources of a manufacturing company. Ideally it addresses
operational planning in units, financial planning in dollars, and declined in various versions [13]. The comparison between
has a simulation capability to answer what-if questions. It is Kanban, ConWIP and a classical push flow method is
made up of a variety of processes, each linked together: shown in figure 2 below.
business planning, production planning (sales and operations
planning), master production scheduling, Material
Requirements Planning (MRP) [9], capacity requirements Push):)
planning, and the execution support systems for capacity and Produc'on)
material. [] Manufacturing Resource Planning is a direct order)
Kanban) Kanban) Kanban)
outgrowth and extension of closed-loop MRP. (Figure 1) Card) Card) Card)
Kanban):)

ConWIP)
Card)
ConWIP:)

Physical)ow) Informa'on)ow)
Worksta'on) Buer)

Fig. 2: Kanban and ConWIP functioning vs. push system

Both push flow method (MRPII) or pull flow methods

Fig. 1: Manufacturing resource planning and control
system [10]
The general market behaviour has evolved in the last 20
years: more demand instabilities, more sensibility to crisis and
economic events, more product diversity, increasing
competition, reduced customer lead times, reduced time to
market, etc. These different parameters result in creating more
variability in MRPII production system and difficulties to
establish accurate forecasts. Moreover, Material Requirement
Planning is known to react nervously to demand changes what
is a source of bullwhip effect [11].
(such as Kanban and ConWIP) have their advantages, their
lacks and hypothesis need to be set up.
Demand-Driven Material Requirement Planning (DDMRP)
is demand-driven and therefore can be considered as a pull
flow management method. DDMRP is recent and could
combine all the benefits from different methods with some
innovations. What are the DDMRP benefits and advantages?
C. Demand-Driven Materials Requirements Planning
(DDMRP)
DDMRP is a multi-echelon materials and inventory
planning and execution solution. [4, 14].
DDMRP gathers the advantages of 5 methods: MRP, DRP,
Lean, TOC, Six Sigma with some innovations as shown in
figure 3.
Demand(Driven(MRP(
(DDMRP)(

B. Pull flow management policy

Pull methods aim at directly manage production from the Material(Requirements( Distribu5on(
Theory(of(
Planning( Requirements(Planning( Lean( Six(Sigma( Innova5on(
real demand in order to reduce variability created by planning (MRP)( (DRP)( Constraints(

and decrease WIP in the process only with what is needed.

One of the well-known methods was created in the Toyota Fig. 3: Concepts used with DDMRP [4]
Production System: Kanban [2]. Kanban is a just-in-time
The first step deals with Strategic Inventory Positioning
manufacturing process in which operators are informed of
and evaluates from a financial point of view if there are
buffers consumption (usually throughout Kanban cards) and
benefits, to position or not a buffer on an article of a Bill Of
replenish their buffers according to inventory priorities and
Materials. The role of these buffers is first to launch
real time machines availability. Kanban has been declined in
replenishments, but they also are supposed to control the
various versions [12].
dispersion of variability (supply, operational, demand and
ConWIP is another pull flow management method management) in the manufacturing system. This step is the
developed in the Theory of Constraints [3]. This method most strategic and original. Succeeding in positioning
constrains the level of WIP in a process. It has also been
DDMRP buffers will help a lot to correctly implement
DDMRP.
Demand'Driven'Material'Requirements'Planning'
Strategic'
Buer'Proles' Dynamic' Demand'Driven'
Inventory'
Posi9oning'
and'Levels' Adjustments' Planning'
1" 2" 3" 4"
Modeling/ReFmodeling'the'Environment' Plan'
Fig. 4: 5 steps to implement DDMRP [4]
As soon as the buffers are positioned it is possible to
define the buffer profiles and levels. In planning context a
buffer inventory is composed of 3 zones: red (the safety
stock), yellow (the mean in-process replenishment quantity)
and green (the replenishment size). These zones will visually
help to decide on buffer replenishments: anytime the inventory
enters the yellow zone a replenishment order is put to reach
the green zone upper level. In execution context, stock buffer
are also decomposed in three zones (red, yellow and green) so
that alerts can be emitted when the stock is in the red or over
the green levels. Another point of DDMRP is to design buffers
levels (inventory or stock) as the produce of Average Daily
Usage (ADU) consumption, Actively Synchronized
Replenishement Lead Time (ASRLT), lead time factors,
variability factors and planned adjustment factors (PAF).
ADU can be the result of a demand forecasting to implement
DDMRP for the first time. ASRLT is an original concept of
DDMRP. It is the longest unprotected sequence (considering a
sum of lead times) in the bill of material of a buffered article.
As buffers are supposed to control variability, unprotected
sequences are considered between buffered articles. As for
MRPII, the choice of the lead time value remains a critical
point of DDMRP. PAF are used to smooth big seasonal
variabilities and can be considered as the result of a Rough
Cut Capacity Planning. PAF is a percentage used to raise or
lower the DDMRP strategic buffer size (for the three zones)
for seasonality, promotions As regards variability factors, it
is used to protect from uncertainty: it is a part of the red zone
and represents the safety stock. Lead-time factor is different
for long lead-time or short lead-time products. Indeed, the
percentage is used to decide on the size of green and red
zones, that is to say to know when to schedule a supply order:
when the lead-time is long the lead-time factor is small (in
order to often produce long-lead time products with a small
quantity).
As buffer levels are defined throughout a formula, this
enables to dynamically adjust them in time (for promotions,
seasonality, ramp-up products).
Finally when DDMRP environment is modeled, the visual
planning and execution tables are used to make decisions
respectively to replenish buffers, to follow supply (with a
projected view in time), to produce and follow production
(with a on-hand inventory view). DDMRP is promising with
the different implementations these last years. However there
are just a few researches works in this topic, due to the
recentness of the method. As a consequence there are still
Visible'and'
some issues to deal with such as:
Collabora9ve'
Execu9on' What is the behaviour of ASRLT between non-
buffered parts: is it only the sum of each lead time?
5" Is DDMRP centralised or decentralised (managed by
the operators as in Kanban) or both?
Execute'
How to perfectly define the buffer levels, the lead
time factor and the variability factor?
What are the cases, the parameters, the hypothesis
(such as environment production type, lead time,
production means load, references amount) where
DDMRP can be efficient or not?
In order to address these issues we need a tool enabling to
get predictive results, impact of parameter changes with a
system functioning with MRPII or DDMRP. Discrete-Event
Simulation (DES) is an appropriate tool for this.
D. Discrete-Event Simulation (DES)
Some computer-aided tools to implement DDMRP are on
the market. However these tools are not able to easily predict
if there would be benefits or not to implement DDMRP. DES
has this predictive capability with its numerous advantages
[15]. DES also permits to add a dynamic dimension in the
simulation model. Indeed, contrary to a static spreadsheet,
DES gives each minute parameter values in order to
characterise them (min, max, standard deviation and mean).
With DES it is possible to manage variability, so to model
and characterise 3 of the 4 DDMRP variability sources:
supply, operational and demand impacts. DES would also
permit to compare different flow management policies and
consequently analyse where DDMRP would bring benefits.
In the next section we will deal with our on-going work
proposition.
III. Our proposition
As explained in the previous section, the goal is to define
representative, generic case studies with specific parameters
(production environment, references number) in order to
have a benchmark. It will enable to get a complete study
taking into account the dynamic dimension and uncertainties
aspects.
Main output indicators that will permit to decide which
method to choose are: On-Time Delivery (OTD) and working
capital. Secondary indicators enabling also to decide are: WIP
level, load production means and Overall Equipment
Effectiveness (OEE).
That is on these generic cases that we would implement the
different planning and flow management techniques in order
to quantify the impacts of DDMRP compared to the others. In There are 5 machines which have a cycle time of 1 hour
order to compare better differences from each flow (table 2) each. The production lot size is 100 parts in 1 hour
management policy, the management part (simulation) will be except for both crowns machining with 200 parts per hour.
divided from the operational part (emulator). Mean-Time Between Failure (MTBF) is modeled with a
negative exponential distribution law and Mean-Time To
Generic cases are implemented with various planning and
Repair with a triangle distribution law. There are also fixed
flow management techniques in order to quantify the impacts
set-up times per machine for each change of article.
of DDMRP compared to the others. In order to compare better
differences from each flow management policy, the
TABLE 1. Products sold with respective BOM
management part (simulation) will be separated from the
operational part (emulator).
The DES operational model (emulator part) will therefore
be the same for various flow management policies evaluation.
The simulation part being in charge of sending required
signals for the emulation part (figure 5).

Flow*management*
!!simula)on!
method*

TABLE 2. Machine input parameters

Opera&onal* !!emulator!

Figure 5: Simulation and emulator parts

In order to get an interesting benchmark, different
parameters will be analysed. The research work benefits will
be to precisely define in which case (previously characterised)
it is interesting or not to set up one or the other flow
management policy. Furthermore, another interest is in the
influence characterisation of parameters variations (bottleneck
location, demand uncertainty, load of the production line, ). For the 16 references (6 reducers, 2 oil pans, 2 gears and 6
crowns), an initial state (initial on-hand inventory), forecasts
This article emphasises our on-going work, the purpose and variations of these forecasts (for a week) must be
was to initiate the experiment platform with one case study managed. Production costs enable to evaluate the working
following MRPII policy and then DDMRP. capital in the simulation model [17]. Selling prices are also
given and enable to evaluate the gross sales. This input data is
IV. Case study given in table 3 for 8 of the 16 parts (only the yellow gear is
The case study comes from the Centre International de la not sold).
Pdagogie dEntreprise (CIPE) Kanban serious game [16]. TABLE 3. Article input parameters
This case study has been used to teach numerous professional
and students the differences between MRP and Kanban. All
the input data is available, with multi-references, components,
subassembly parts and an assembling activity.

A. Input parameters
The case study deals with a company that produces
reducers. These reducers are composed of three parts: one oil
pan, one gear and one crown. Each of these components needs
one machining step except for crowns which need two (A
Table 3 gives forecast data for one week with a hypothesis
crown and then B crown). An oil pan can be red or blue, a
of a stable demand trend over the weeks. 6 weeks of demand
gear white or yellow and a crown white, green or red. 6
orders are given (table 4). Each day in the emulator, customers
different reducers are sold and spare parts (A crown white) are
will be delivered before the start of the workday. Undelivered
also sold (table 1).
articles are delivered as soon as possible.
B. MRPII and DDMRP implementation
In the case study, the system has enough capacity (in
theory) but has a consequent general load. The goal is first to
deliver customers on time and then to minimise the WIP
amount (and therefore the Working Capital). With MRPII, a
choice must be made to define an amount of reducers to
produce (Sales and Operations Planning). In this case it is
3,000 each week. At the Master Production Scheduling level
the production is divided into the 6 reducers by keeping a total
amount of 3,000 reducers. 1,600 A white crowns are also
planned (only for spare parts).
TABLE 4. The 6 weeks orders
Then the Material Requirement Planning can be done
to define for each reference the production to realise. A final
step is realised to get the dispatching for one week. Table 5
shows the final dispatching for one week (it will be repeated
for 6 weeks as the demand trend is the same).
As regards DDMRP, with all the input data the
Strategic inventory positioning can be done. For each
scenario, different buffers are positioned. Consequently for
each buffer in each scenario, an ASRLT can be computed for
designing the different buffer zones. With these zones the
average on-hand inventory level can be assessed to get the
total cost of each buffer: average on-hand inventory is the
sum of the Red and the half of Green zone.
TABLE 5. Dispatching for one week
Tables 6 and 7 show two buffering cost analysis. ADU is
given from forecasts. ASRLT is calculated from the number of
cycles, of changes it is possible to do in a week, for each
product. Table 6 deals with the scenario for buffering all
products sold, both gears and both oil pans. Buffering gears
and oil pans is quite expensive (table 3) but does not reduce a
lot the Reducers ASRLT. That is due to the ASRLT of crown
B and A equal to 4,5 days (so 9,5 ASRLT days for reducers).
This scenario costs nearly 850,000. On the contrary, the best
scenario (table 7) is to buffer 14 of the 16 references: only
green and red crown A are non-buffered. In this case the total
buffering cost is nearly 620,000 (nearly 25% less). This
second scenario is retained for this case study
All the input data for both methods is ready. Then the
simulation model can be realised. In our case study we used
Witness from Lanner as DES software. A view of the
DDMRP model with Witness is shown in figure 6 below.
From an execution point of view, when there are two
references to produce, the priority is given to the reference
with the lowest percentage of the Red plus Green buffer zone.
 TABLE 6. Buffering cost analysis for products sold, gears and oil pans

TABLE 7. Buffering cost analysis for all products except for Crowns A green and red

Fig. 6: Witness view of the DDMRP implementation


C. Results
Three scenarios are presented in this this part: (1) is MRPII
with dispatching of table 5. Then two DDMRP scenarios were
implemented and tested. The first one (2) is with buffer zones
in table 7 (3 lines of planning). The second one is with some
changes in lead time factor in order to increase the green
reducer zone: the lot size will be bigger so there would be less
set-up time with less machines changes.
The initial state had not enough parts from a DDMRP
point of view. As a consequence, all parts were replenished
and some time was needed to reach a stationary functioning.
All the simulation results are given in table 8 below. All
these output indicators (section III) come from the last three
weeks of simulation (out of the six weeks taken at the
beginning).
MRPII has a higher OTD (93%) but more average
Working Capital (28% more than for (2) ). With some changes
(3), the average Working Capital rose by 12%.
Whether it is case (1) or (3), missing amounts are
equivalent. On the contrary, (2) has less accumulated missing
parts in the last three weeks (1300 compared respectively to
1800 and 1700). However there are more different missing
parts than in cases (1) and (3).
As regards WIP, it is reduced in DDMRP scenarios
compared to MRP (respectively 26% and 21% less than
MRP). The main differences are noticed in reducers and
crowns B.
Finally the last indicators apply to the machines. The input
indicators are nearly the same for assembling. On the contrary,
with crowns A and B machining, set-up rates are bigger in (2)
and (3), especially with crown B. These 2 machines have
enough capacity and DDMRP enables to change more often
and adapt itself to the demand. With bigger lot sizes (3), there
are even more changes than with (2): in (2), sometimes 2 lots
from the same reference are taken in a row. Finally, with gear
and oil pan machining, OEE is bigger with (1). The set-up
time differences explain this gap. However gear and oil pan
machining are moving bottlenecks (it depends on breakdowns)
as assembling: it explains the missing parts for (2) and (3).
Missing parts from (1) are due to the overestimated production
order size, while there are other parts ordered.
 TABLE 8. 3 scenarios comparison

(1)$MRPII$with$dispatching (2)$DDMRP$without$changes (3)$DDMRP$with$factor$changes

On=Time$Delivery$(%) 93% 91% 90%
Average$Working$Capital$() ((((((((((((((((((((((((((((((((((((( 374(868( $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ 292$932$ ((((((((((((((((((((((((((((((((((((( 327(307(
Minimum(Working(Capital(() ((((((((((((((((((((((((((((((((((((( 343(100( $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ 238$700$ ((((((((((((((((((((((((((((((((((((( 280(100(
Maximum(Working(Capital(() ((((((((((((((((((((((((((((((((((((( 405(000( $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ 345$200$ ((((((((((((((((((((((((((((((((((((( 383(600(
Sum$of$missing$part 1800 1300 1700
Sum(of(R1(missing 0 200 0
Sum(of(R2(missing 0 0 0
Sum(of(R3(missing 100 0 100
Sum(of(R4(missing 1500 100 1100
Sum(of(R5(missing 200 200 500
Sum(of(R6(missing 0 700 0
Sum(of(crown(A(white(missing 0 0 0
16$parts$average$WIP 13040 9601 10342
Reducers(average(WIP 1835 1304 1329
Crowns(B(average(WIP 5514 2624 2788
Crowns(A(average(WIP 2561 2345 2201
Gears(average(WIP 897 1148 1358
Oil(pans(average(WIP 2233 2179 2666
OEE((%) 76,4 76,7 77,3
Availability(rate(%) 7,9 7,1 7,9
Assembling
SetTup(rate((%) 14,2 14,7 13,3
Breakdown(rate((%) 1,5 1,5 1,5
OEE((%) 63 57,8 52,5
Crown$A$ Availability(rate(%) 10,3 12,3 14,2
machining Set=up$rate$(%) 18,3 23,5 26,7
Breakdown(rate((%) 8,4 6,6 6,6
OEE((%) 44,6 41,2 38,2
Crown$B$ Availability(rate(%) 20,6 5,2 1,8
Machining Set=up$rate$(%) 30 49,1 56
Breakdown(rate((%) 4,8 4,5 4
OEE((%) 70,5 63,3 67,6
Gear$ Availability(rate(%) 0 0 0
machining Set=up$rate$(%) 12,5 19,7 15,5
Breakdown(rate((%) 17 17 17
OEE((%) 79,1 74,1 77,3
Oil$pan$ Availability(rate(%) 0 0 0
machining Set=up$rate$(%) 13,2 18,1 15
Breakdown(rate((%) 7,7 7,7 7,7

influences (global system load, demand variations). Further

V. Conclusion and Future research analyses will be done to analyse results on this difficult subject
This article constitutes a first step to deal with our research with more simulation runs.
method and implement DDMRP into DES. The goal is to get a
However, the case study hypothesis were in favour of
benchmark with several case studies. This article enables to get
MRPII: demand does not have lots of variability and there are
a first sight of the possible DDMRP impacts. This case study
no spikes so it is easier to anticipate. Set-up times are long for
will be dealt with in depth in order to study the parameters
bottlenecks machine, which is a constraint for pull flow
management where there is less flexibility.
Nevertheless, DDMRP gets good output indicators
compared to MRPII with less Working Capital (and WIP) but
with a less satisfying OTD. In our case study DDMRP
manages to adapt more rapidly to real demand however there
are more different references missing with a fewer quantity.
Finally we noticed that modifying, lead time and variability
factor, even a little, lead to major differences.
Some others subjects are on-going work:
- In reality, if a part is not buffered, is its parent
ASRLT the sum of its ASRLT and the previous
ASLRT of its parent? (if there is a First In First Out
buffer for example)
- This case study firstly aims at comparing MRPII and
Kanban methods. Kanban will be also implemented
in order to compare its behaviour.
- Who manages DDMRP? Is it a centralised or
decentralised system (as Kanban where operators
manage themselves their activity)?
- ASRLT, Lead Time Factor and Variability Factor are
input data. Thanks to DES and optimisation, it
would be possible to analyse the impacts of data
changes and find the best positioning and
dimensioning buffers.
- What is the DDMRP behaviour compared to MRPII
in a more flexible system?
- DDMRP manages spikes [4] if there are orders and
spikes known. What are the impacts on the systems
behaviour?
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