Page 106 - Orlicky's Material Requirements Planning

CHAPTER 5 Principles of Materials Requirements Planning 85

until the tenth week. This determines the (latest) release date for that order based on the
item’s lead time. Time phas ing, in this case, yields additional valuable information. In the
fourth week, the availability is negative, which indicates that while total coverage is ade-
quate for the first nine weeks, the timing within the nine-week span is out of phase. The
inventory planner sees exactly what specific action is called for if a stock-out, or shortage,
is to be prevented, and he or she sees it (in this case) four weeks in advance. The open
order should be rescheduled to be completed one week earlier.
The difference between a time-phased and a non-time-phased inventory control sys-
tem, in terms of usefulness and effectiveness, is considerable. The differences in data-han-
dling, data-manipulation, and data-storage re quirements also are considerable, as can be
seen in the preceding two exam ples. In the first one, inventory status is expressed
through four data ele ments. In the second example, 26 data elements are used.
The data-processing burden in maintaining time-phased status data up to date is
substantial. This is so not only because there are so many more data ele ments involved
but also because of the fact that with non-time-phased data, only changes in the quanti-
ties need to be processed, whereas time-phased status information has to reflect changes
in both quantity and timing (i.e., changes in the timing even when the quantities remain
unaffected). Time-phased MRP systems represent a classic com puter application in the
sense that here the computer is being used to do something heretofore literally impossi-
ble—handling and manipulating vast quantities of data at high speed. In a fairly typical
situation where status information for 25,000 inventory items is time-phased by week
over a one-year span, some 5 million data elements may be involved. Given available
technology, this is no longer a problem.
Further advancement of technology and business rules has advanced the use of
automated planning tools, and now, demand-driven MRP is possible. The first question
to be answered is no longer “when” but “where.” Chapter 4 details the information
required to answer the critical “where” question.

INVENTORY SYSTEM CATEGORIES
MRP (time phasing is implied by the term) evolved from an approach to inventory man-
agement in which the following two principles are combined:
■ Calculation (versus forecast) of component-item demand
■ Time phasing, that is, segmenting inventory-status data by time
The term component item in MRP covers all inventory items other than products or
end items. Requirements for end items are stated in the master production schedule, and
they are derived from forecasts, customer orders, field warehouse requirements, inter-
plant orders, and so on. Requirements for all component items (including raw materials)
and their timing are derived from this schedule by the MRP system.
MRP consists of a set of techniques eminently suitable for the management of inven-
tories subject to dependent demand, and it represents a highly effective inventory control