Research issues for multi-level lot sizing in MRP systems

What lot size model(s) to use in a Material Requirements Planning (MRP) system is an unresolved and often debated issue. The concept of dependent demand, the complex network defined by the product structure, the dynamics of an operating MRP-based system, and the subsequent use of the planned order release schedule by other company subsystems represent a totally new environment for making and managing lot size decisions.The purpose of this paper is to identify and briefly examine ten research issues related to lot sizing in a dependent demand product structure. These ten issues expand the solution space for lot sizing in an MRP-based system compared to a reorder point based system. Areas for further research are suggested.     

Black markets: Illegality, information, and rents

The analysis of black markets typically treats illegality only in reduced form as an additional cost per transaction. We argue that this misses the essential feature of black markets: that the risk of detection depends upon the dissemination of information. Because the cost of information is increased, traders will change marketing technology from advertising to sequential approaches to potential customers. The trader's decision problem is his offer price: as he raises it he must expect to make more approaches per sale and thereby increase detection risk. This behavior is important because of its implications at the market level. The optimal offer price will be set at a level at which excess demand persists: would-be consumers are not always able to bid themselves into supplies. Hence, black markets are not sufficient to eliminate the shortages which arise from price controls. In an earlier paper the authors established that peasant supply response to crop prices would be perverse in the presence of shortages: black markets therefore need not restore normal responses. The paper includes evidence from rural Tanzania.     

Resolving contradictions in institutional demands through loose coupling

Organizational units are often required to satisfy institutional demands from internal or external stakeholders that, when examined in their totality, are contradictory. Drawing on interviews with the leadership teams from four national offices of a multinational professional marketing services firm, we develop a framework to explain how an organizational unit can locally resolve these contradictions by becoming loosely coupled with their institutional environment. The framework describes how the organizational unit leverages trust from organizational superiors to develop a space that receives minimal organizational oversight, allowing them to locally implement strategies for resolving contradicting institutional demands. The framework also demonstrates how alliance building is integral to this process of resolving contradictory institutional demands.