Aspects on the optimal decoupling point setting problem

Herbert Jodlbauer, Matthias Dehmer and Frank Emmert-Streib

Applied Mathematics and Computation, 2025, vol. 496, issue C

Abstract: Demand-Driven Material Requirement Planning (DDMRP) represents a combination of traditional Material Requirements Planning (MRP) and the reorder point method. A key consideration in DDMRP revolves around determining the optimal position of decoupling points, also referred to as strategic inventory positions. This article addresses the question of where these decoupling points should be strategically positioned, utilizing a directed universal graph derived from the Bill of Materials (BOM) to formalize the optimal decoupling point setting problem. To address this challenge, analytical formulas are developed. The analytical formulas utilize parameters such as delivery time, demand variance, replenishment time, lot sizes, holding costs, and service levels. These formulas provide insights into key characteristics of optimal decoupling points. The obtained results can be categorized into arguments advocating for decoupling points to be positioned either more upstream or more downstream. Furthermore, we derive specific characteristics that an optimal decoupling point position should possess. This research contributes valuable knowledge for practitioners seeking to enhance the efficiency and effectiveness of their DDMRP implementation.

Keywords: Customer order decoupling point; Strategic inventory positioning; Reorder point; Demand-driven material requirement planning; Graph optimization (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:apmaco:v:496:y:2025:i:c:s0096300325000700

DOI: 10.1016/j.amc.2025.129343

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