Requirements Planning in the New Normal: Comparison Between Reorder Point Method and DDMRP.

Great dynamism and uncertainty characterize today's market situation, increasing the supply chain's complexity. This imposes the improvement of the classical production control systems. The present production environment is challenging, as traditional manufacturing planning and control systems were not developed to work in this context. The Demand Driven Material Requirements Planning (DDMRP) is a recently introduced method, proposed as an upgrade of the traditional methodologies which are widely used in today’s industry, capable of overcoming the nervousness and the bullwhip effect affecting supply chains under uncertainties. The DDMRP approach, however, is still not well established since the conditions for its application have been investigated more closely only in the last few years. In fact, there is a lack of literature in this field and only a few studies have scientifically proven the performance of DDMRP by applying this innovative method in real-world contexts. The aim of the study is to analyze the characteristics of this innovative methodology through the study of its basic principles and the evaluation of its performance. In this regard, the behavior of the DDMRP is simulated at varying demand conditions and the results are compared with those obtained from applying a classical methodology, i.e., the reorder point method. It emerged that substantial differences between the two analyzed methodologies are in the objective function (cost minimization vs service level maximization), and in the responsiveness to demand and lead time variability. Furthermore, it has been demonstrated that the breakeven point, at which the two models equally perform, exists.