Correlating MRP system nervousness with forecast errors

The purpose of this paper is to examine the impact of forecasting errors on the scheduling instability in a material requirements planning (MRP) operating environment. A sophisticated forecasting method is supposed to provide an accurate forecasting result, which, in turn, should create stable down-stream operating conditions. Through a simulation experiment, we find that forecasting errors may not cause a higher degree of scheduling instability given the forecast errors considered in this study. The scheduling instability, or MRP system nervousness, can be mitigated by using an appropriate lot-sizing rule. Thus, it is important for schedulers to understand this correlation between forecast errors and scheduling stability. After schedulers take reasonable efforts to find a good forecasting method, they do not need to be overly concerned with the associated forecast errors. The selection of an appropriate lot-sizing rule is capable of coping with forecast errors.