Page 123 - Orlicky's Material Requirements Planning

102 PART 2 Concepts

FACTORS AFFECTING THE
COMPUTATION OF REQUIREMENTS
The computation of requirements is complicated by six factors:

■ The structure of the product, containing several manufacturing levels of materi-
als, component parts, and subassemblies
■ Lot sizing, that is, the ordering of inventory items in quantities exceed ing net
requirements for reasons of economy or convenience
■ The different individual lead times of inventory items that make up the product
■ The timing of end-item requirements (expressed via the MPS) across a planning
horizon of, typically, a year’s span or longer and the recurrence of these require-
ments within such a time span
■ Multiple requirements for an inventory item owing to its so-called com monality,
that is, use in the manufacture of a number of other items
■ Multiple requirements for an inventory item owing to its recurrence on several
levels of a given end item

Product Structure
Product structure imposes the principal constraint on the computation of requirements. This
computation, while very simple arithmetically, requires that a rather involved procedure be
followed. This is caused by the fact that a given component item can exist in its own right as
a uniquely identified physical entity (e.g., a unit of raw material, a component part, or a sub-
assembly), and it also can exist physically, but as an already-assembled component (or “con-
sumed” material) of another inventory item, in which case it has lost its individual identity.
For example, gear C in Figure 4-2 can exist as such and would be so carried on the invento-
ry record, and it also can exist as part of the (already-assembled) gearbox B or transmission
A without an identity of its own. For purposes of determining net require ments, the physi-
cally existing quantities of the item must, in effect, be ac counted for irrespective of identity.
Such accounting will be the more laborious the more levels of the product are
involved. Product depth therefore is a factor in the scope and dura tion of the MRP data-
processing job. The concept of product level (or manufacturing level) is related to the way
the product is structured, that is, manufactured. Each stage in the manufacturing process
of converting material into product is equivalent to a level of product struc ture.
The engineering document that defines the product is the bill of material (BOM),
which lists components of each assembly and subassembly. Its conventional graphic rep-
resentation is shown in Figure 6-3.
The assembly in question is termed the parent item, and its component items, some-
times are referred to as children parts, are listed by identity code (part number) with the
quantity per (one unit of) parent item. The term bill of material is used interchangeably for
a single-item bill (such as shown in Figure 6-3) for all such bills, collectively, pertaining to
a given product and for the en tire BOM file. (BOMs are discussed further in Chapter 11.)