Evaluating the impact of frequent engineering changes on MRP system performance

The major objective of engineering change is to redesign product/component parts to perform better or to be produced more efficiently. However, frequent engineering changes contribute to scheduling instability. When a material requirements planning (MRP) system is used as the production planning and inventory control method, scheduling instability becomes the most difficult problem for production planners to deal with. The purpose of this paper is to evaluate the trade-off between frequent engineering changes and resultant cost increments in writing off obsolete items. A simulation experiment is conducted to examine the effect of different frequencies of engineering changes on the performance of a multi-level MRP system under various operating environments. An analysis is also performed to evaluate the sensitivity of base experimental results to changes in important parameters which are held constant in the simulation experiment. Results show that frequent engineering changes indeed deteriorate MRP system performance considerably. Furthermore, an appropriate selection of lot-sizing rule tends to mitigate the impact of frequent engineering changes. A lot-sizing rule such as part-period balancing consistently generates the least cost increment as engineering changes become frequent.