Page 112 - Orlicky's Material Requirements Planning

CHAPTER 5 Principles of Materials Requirements Planning 91

order to function at all. The assumption is that the expediters are actually putting a pri-
ority on what is really needed and not just to fill stock shelves.
Under an order-point system, the BOM is not even referenced, and the quality of its
data therefore is irrelevant for purposes of inventory planning. The formal push system
uses the inventory-status data, which may be (and usually are) faulty, but this is com-
pensated for by the informal pull system that does not rely on the inventory records at all
but determines specific need for inventory items, and the timing of this need, physically,
in the stockroom or on the assembly line. It is the expediting action that the whole pro-
curement and manufacturing operation then really depends on.
In contrast, under an MRP system, which provides both the push and pull functions
in the formal system, there is no need for the informal system of manual shortage-list
expediting, but this benefit will not be realized if the quantities and timing of orders are
incorrect owing to lack of file data integrity. This integrity is vital to the MRP system, and
the meticulous maintenance of the files involved calls for a special effort on the part of
the system user—a novel requirement and cost.
An MRP system presupposes that lead times for all inventory items are known and
can be supplied to the system, at least as estimates. See Chapter 4 for a deeper discussion
on lead times. The lead time used for planning purposes normally must have a fixed
value. This value can be changed at any time, but more than one value cannot be in exis-
tence simultaneously. An MRP system cannot handle indeterminate-item lead times.
An MRP system assumes that every inventory item under its control goes into and
out of stock, that is, that there will be reportable receipts, following which the item will
be (even if only momentarily) in an on-hand state and eventually will be disbursed to
support an order for an item into which it is dispositioned. This assumption means, in
essence, that the progression of the manufacturing process from one stage to the next will
be monitored, usually (but not necessarily) by means of a stockroom through which the
items pass physically. Lean applications of MRP can simply backflush the material that
had to have been used to maintain sufficient inventory record accuracy without the com-
ponents or finished goods ever passing through a stockroom.
In determining the timing of item gross requirements, the (standard) MRP proce-
dure assumes that all components of an assembly must be available at the time an order
for that assembly is to be released to the factory. Thus the basic assumption is that unit
assembly lead time (the time required to produce one unit of the assembly) is short and
that the several components are consumed, for all practical purposes, simultaneously. As
far as subassemblies are concerned, this assumption almost always holds true. In cases of
significant exceptions to this rule (e.g., where it may take several weeks to assemble a unit
and expensive compo nents are consumed successively over this period), the regular
require ments computation procedure would have to be modified.
Another assumption under MRP is discrete disbursement and use of component
materials. For instance, if 50 units of a component item are required for a given (fabrica-
tion or subassembly) order, the MRP logic expects that exactly 50 units can be disbursed
and that 50 units will be consumed. Materials that come in continuous form (rolls of sheet