Page 122 - Orlicky's Material Requirements Planning

CHAPTER 6 The Material Requirements Planning System 101

should be under time-phased order-point control (described in Chapter 7). Items subject
to both dependent and independent demand have the forecast quantities simply added
to the (computed) gross requirements. Note that service-part demand is either forecast or
recorded on receipt of orders (placed by a service-part organization operating its own
system) but, as a rule, not both.
The inventory record file, also called the item master file, consists of the individual item
inventory records containing the status data necessary for determining net requirements.
This file is kept up-to-date by the posting of inventory transactions that reflect the various
inventory events taking place. Each transaction (i.e., stock receipt, disbursement, scrap,
etc.) changes the status of the respective inventory item. The reporting of trans actions
therefore constitutes an indirect input to the MRP system. Transac tions update item status,
which then is consulted and modified in the course of computing requirements.
In addition to status data, the inventory records also contain so-called planning fac-
tors used principally for determining the size and tim ing of planned orders. Planning fac-
tors include item lead time, safety stock (if any), scrap allowances, lot-sizing algorithms,
and so on. Planning-factor values are subject to change at the system user’s discretion. A
change in one or more planning factors normally changes inventory status.
The bill of material (BOM) file, also known as the product-structure file, contains infor-
mation on the relationships of components and assemblies that are essential to the cor-
rect development of gross and net requirements.
All the inputs just reviewed enter into the MRP process, the principal purpose of
which is to establish (reestablish) correct inventory status of each item under its control.
The factors involved in establishing this status are the following:
■ Requirements
■ Coverage of requirements
■ Product structure
■ Planning factors

What sets the MRP process in motion varies depending on system implementation
and system use. With so-called regen erative MRP systems, which employ batch-process-
ing techniques, the re planning process is carried out periodically, typically in daily inter-
vals. Here, passage of time triggers the process. With so-called net-change MRP systems,
it is the inventory events (transactions) that cause replanning to take place, more or less
continuously.
Changes in requirements, coverage, product structure, relevant engineering
changes, or planning factors affect inventory status and therefore must be reflected in the
replanning. Regenerative MRP systems, in effect, take a snapshot of these factors as they
are at the time of each periodic require ments computation on the assumption that any
and all changes have been incorporated during the preceding interval. These systems
deal periodi cally with situations that are static at the time. Net-change MRP systems, on
the other hand, must deal continuously with a dynamic or fluid situa tion. This requires
that changes in any of the four factors mentioned be reported to the system as they occur.