A net present value approach to safety stocks in a multi-level MRP system

A study was conducted to extend the analysis of obtaining optimal safety stock levels in material requirements planning systems to a multi-level system supporting production that takes place based on a lot-for-lot policy. The production correlates with the application of the net present value as the objective criterion and a disregard of opportunities for joint set-up. Findings indicated the applicability of single-level results in multi-level cases during a lot-for-lot policy.