Information processing structures and decision making delays in MRP and JIT

Prior literature has asserted that higher supply chain visibility, concerned with better information flow and determining more accurate demand levels within the supply chain at a given time, improves decision-making efficiency. Decision-making efficiency denoted by decision-making delay is in turn dependent on the information processing structure. Different production control systems have different information processing structures. This paper considers the relations between the production control system (MRP and JIT) and the organization structure of information processing that determines the decision making delay. We compare MRP and JIT across different information processing structures and decision efficiency, and find that JIT is suitable for small lot size and large variety production and MRP for large lot size and small variety production. In addition, an optimized organization structure of information processing will surely reduce the decision making delay.

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