Page 107 - Orlicky's Material Requirements Planning

86 PART 2 Concepts

system for manufactur ing environments, where the bulk of the inventory is subject to this
type of demand. It should be noted that while an MRP system is ori ented primarily
toward dependent-demand inventory, it also easily accommodates independent-demand
items such as service parts. These can be integrated into the system through the time-
phased order-point technique discussed briefly below and more fully described in
Chapter 7. There are, as mentioned previously, some inventory items that are subject to
both dependent and independent demand, such as service parts still used in cur rent pro-
duction. In an MRP system, the service-part demand, which is fore cast, is simply added
to the dependent demand that has been calculated. The MRP system takes it from there.
With reference to the two above-mentioned principles, demand calcula tion and time
phasing, any manufacturing inventory control system can be assigned to one of four cat-
egories based on combinations of these principles. This is illustrated in Figure 5-2, which
shows, in matrix form, the four system categories:
■ Statistical order point
■ Lot requirements planning
■ Time-phased order point
■ MRP
Statistical order point, the conventional approach in the past, has already been dis-
cussed at some length in Chapter 4. It uses forecasting to determine demand and gener-
ally ignores the aspect of specific timing. In light of what is possible today thanks to com-
puter technology, this type of system must be con sidered obsolete for purposes of man-
ufacturing inventory management.
Lot requirements planning was developed and used by some manufactur ing compa-
nies toward the end of the era of punched-card data processing, generally the 1950s and
early 1960s. Some companies still use this approach, in which component-item demand
is derived from a master production schedule and is calculated correctly as to quantity
per lot of product or end item but in which specific timing is disregarded. Requirement
and order data are summarized by (product) lot, and it is the position of the lot in the
master schedule that implies timing. Specific timing of order releases, due dates, and pro-
duction schedules then is established—if it is established—through procedures external
to the inventory system.

FIGURE 5-2
Component Demand
Inventory system Forecast Calculated
categories.
Quantity Statistical Lot
Maintenance Only Order Point Requirements
of Planning
Status
Data Quantity Time-Phased Material
and Order Point Requirements
Timing Planning