Strategic Buffer Positioning is one of the components of Demand Driven Material Requirements Planning (DDMRP). The main objective is to answer the question of where to hold inventory along the bill of materials to optimize total inventory cos, the lead-time or both. We first formulated a mixed linear programming and implemented it on CPLEX to provide optimal solutions. Since the problem is NP-hard, three heuristics are proposed. The most efficient is based on dynamic programming algorithm. Its principle is applied to solve knapsack problems. Moreover, some special cases are discussed where optimality is obtained.