Materials requirement planning when there is scrap loss

When yield is uncertain, the net requirement amount planned by an MRP system must be increased to allow for scrap loss. Performance of five possible lot size adjustment heuristics of planning for scrap are simulated over a year on three different manufacturing processes. An expected value rule performs best to minimize component inventory, but a marginal rule based on balancing the expected cost of an additional setup against the expected cost of holding additional inventory performs better to meet master production scheduling requirements.