Proceedings of the 2020 Winter Simulation Conference K.-H. Bae, B. Feng, S. Kim, S. Lazarova-Molnar, Z. Zheng, T. Roeder, and R. Thiesing, eds. ON THE USE OF SIMHEURISTICS TO OPTIMIZE SAFETY-STOCK LEVELS IN MATERIAL REQUIREMENTS PLANNING WITH RANDOM DEMANDS Barry B. Barrios Angel A. Juan Javier Panadero Universitat Oberta de Catalunya – IN3 Euncet Business School Av. Carl Friedrich Gauss 5 Castelldefels, 08860, SPAIN Klaus Altendorfer Andreas J. Peirleitner School of Business and Management University of Applied Sciences Upper Austria Wehrgrabengasse 1-3 Steyr, 4400, AUSTRIA Alejandro Estrada-Moreno Dept. d’Enginyeria Inform` atica i Matem` atiques Universitat Rovira i Virgili Av. Pa¨ ısos Catalans 26 Tarragona, 43007, SPAIN ABSTRACT Material requirements planning (MRP) integrates the planning of production, scheduling, and inventory activities in a manufacturing process. Many approaches to MRP management focus either on the simulation of the system (without considering optimization aspects) or in its optimization (without considering stochastic aspects). This paper analyzes a MRP version in which the demand of final products in each period is a random variable. The goal is then to find the optimal safety-stock configuration of both the product and the parts, i.e.: the configuration that minimizes the expected total cost. This total cost is given by: (i) the inventory cost; and (ii) a penalty cost generated by the occurrence of stock outs. To solve this stochastic optimization problem, a spreadsheet simulation model is proposed and a heuristic procedure is employed over it. A numerical example illustrates the main concepts of the proposed approach as well as its potential. 1 INTRODUCTION Material requirements planning (MRP) refers to a planning and push control system that minimizes the inventory levels while ensuring the material availability (Krajewski and Ritzman 2005). According to Orlicky (1975), an MRP system “consists of a set of logically related procedures, decision rules, and records designed to translate a master production schedule into time-phased net requirements”. Hence, an MRP system allows for determining the number of parts, components, and materials required during the generation of each final product. Hence, MRP systems are traditionally employed by factories that make use of assembly operations during the production process. A schematic representation of an MRP system is given in Figure 1. As described in Heizer et al. (2017), the starting point is a master production schedule (MPS), which defines the manufacturing of final products per period (e.g., a week). Then, a bill of materials (BOM) or product structure file identifies the 1539 978-1-7281-9499-8/20/$31.00 ©2020 IEEE