Page 114 - Orlicky's Material Requirements Planning

CHAPTER 5 Principles of Materials Requirements Planning 93

It is clear that the original application of MRP methods generally is limited to dis-
crete as compared with continuous-process manufactur ing. In the past, it was thought
that the use of these methods would be warranted only in manufacturing operations
involving relatively complex assembled products, but developments have disproved
this. Companies that manufac ture some very simple products, including one-piece prod-
ucts, can and now do use MRP systems.
It is true that the first companies to develop and use MRP systems were manufac-
turers of highly engineered assembled products in the metalwork ing industries, typical-
ly operating machine shops (job shops) in which large numbers of orders were in process
simultaneously. This type of en vironment represents the most severe inventory manage-
ment and produc tion planning problems, and it was to alleviate these problems that the
com panies in question reached for MRP methods as soon as it became feasible (with com-
puters) actually to implement them.
Since the pioneer days of MRP, companies in so many diverse manufacturing busi-
nesses (including cable and wire, furni ture, and packaged spices) have adopted this
approach that applicability criteria have been obscured. What is common to all these
companies (or plants), and what represents the principal criterion of MRP applicability,
is the existence of an MPS (not to be confused with a final assembly schedule) to which
raw materials procurement, fabrication, and subassembly activities are geared.
The MPS (discussed more fully in Chapter 12) governs component production activi-
ties. The final assembly schedule re sponds to external (i.e., customer, field warehouse, etc.)
demand for end prod ucts, is usually stated in different terms (i.e., product models, config-
urations, etc.), involves a shorter lead time, and is made up later in time. In respond ing to
the demand for end products, the final assembly schedule is constrained by the availabili-
ty of components provided by the MPS. In some types of businesses, the two schedules
may be identical (as in cases of small simple products or products engineered and manu-
factured to order), but this is a coincidence caused by the nature of the product in question.
MRP therefore is applicable to manufacturing environments that are oriented
toward fabrication (the term here also covers subassembly where subassembly applies)
of components. Final assembly operations normally are outside the scope of the MRP sys-
tem as we know it in its present standard form. MRP can be said to be primarily a com-
ponent-fabrication planning system. An MRP system can be used by any plant that has
or can have an MPS.
The preceding discussion dealt with applicability by type of business. The criterion
of applicability by type of inventory item (in a plant using an MRP system) is simple and
straightforward: MRP is applicable to any discrete item, purchased or manufactured, that
is subject to dependent demand. Other attributes of the item, such as cost, volume of
usage, or continuity of demand, are irrelevant to MRP applicability. Low-cost, high-vol-
ume parts do not seem to deserve elaborate treatment, and it is a natural tendency for the
first-time MRP sys tem user to exclude such items from his or her new system. Experience
has shown, however, that after several months of operation under MRP, even the lowest-
cost, highest-volume items typically are incorporated into the system.