Page 118 - Orlicky's Material Requirements Planning

CHAPTER 6 The Material Requirements Planning System 97

In an MRP system, the net-requirement quantities are always related to time, that is,
to some date or period. The net requirements then are covered by planned orders, and
the order quantities either match net requirements or are calculated by employing one of
several lot-sizing techniques designed to take into account the economics of ordering.
The timing of planned-order releases is also determined by the MRP system, and the
information is stored for purposes of future order action.
The function of providing coverage of net requirements is served only in part
through planned (i.e., future) orders. The MRP system also reevaluates the timing of open
orders relative to (possibly changed) net requirements in the near future, and it signals
the need for rescheduling these orders, forward or backward in time, as required, to
realign coverage with net requirements.

THE PURPOSE OF THE SYSTEM
An MRP system is capacity-insensitive in that it will call for the production of items for
which capacity may not, in fact, exist. This might appear to be a shortcoming of MRP, but
on a moment’s reflection, it can be seen that this is not so. A system can be designed to
answer either the question of what can be pro duced with a given capacity [i.e., what the
master production schedule (MPS) should be] or the question of what need be produced
(i.e., what capacity is required) to meet a given MPS, but not both simultaneously. Process
industries tend to ask the capacity question first, whereas discrete manufacturing com-
panies tend to ask the latter question first. Current MRP systems are designed to answer
the both questions iteratively. The industry will determine which question is asked and
answered first. See Chapters 15 through 18 for more detail by industry.
An effective MRP implementation assumes that capacity considerations have
entered into the makeup of the MPS. An MRP system “believes” the MPS, and the valid-
ity of its outputs is always relative to the contents of that schedule. Another way of stat-
ing this is to say that the MPS can be invalid (vis-à-vis available capacity), but the out-
puts of an MRP system (assuming valid file data and correct proce dures) cannot.
The output of an MRP system is not necessarily always realistic in terms of lead
time, capacity, and availability of materials, particularly when the system plans require-
ments for an unrealistic MPS. It is then merely saying, “This is what you would have to
be able to do to implement the schedule.” Why the schedule is unrealistic thus is re vealed
in specific terms.
In any manufacturing operation, the questions of what materials and com ponents
are needed, in what quantities, and when—and the answers to these questions—are vital.
An MRP system is designed to provide just these answers. MRP systems are a highly
effective tool of manufacturing inventory man agement for the following reasons:

■ Inventory investment can be held to a minimum.
■ An MRP system is change-sensitive and reactive.
■ The system provides a look into the future on an item-by-item basis.