Material Requirements Planning (MRP) systems are frequently used in discrete parts manufacturing to
determine planned order releases. This paper proposes a mixed integer program (MIP) model to
determine the optimal values of planned lead times to be used by an MRP system. The MIP contains a set
of integrated constraints that determine planned orders similar to how an MRP system would while
executing these planned orders under capacity and component availability constraints. The model
includes an optional fixed-periods lot sizing policy and minimizes the costs of excess finished and inprocess
inventories, setups, backorders, exceeding capacity (e.g. outsourcing), and changes in planned
lead times. Experimental results—using data from a DRAM manufacturer—indicate that the proposed
method of determining planned lead times is superior to a commonly used ad hoc method for
determining the planned lead times used by an MRP system