Page 147 - Orlicky's Material Requirements Planning

126 PART 2 Concepts

expected to elapse between order release and order completion—if everything else went
according to plan. This is the planned lead time, not to be confused with the actual lead
time. The latter generally can be determined only in retrospect because it is the amount
of time it actually took to complete the order in light of possible changed re quirements
and unplanned events. The actual lead time of a given item may and often does vary
widely from order to order.

Lead-Time Contents
Planned, or normal, lead times must be used by the MRP system for purposes of plan-
ning, but their accuracy is not crucial. These lead times are, after all, used merely to deter-
mine order release dates, which are considerably less important than the completion
dates related to actual lead times. The lead time of a manufactured item is made up of a
number of elements, listed here in descending order of significance:

■ Queue (waiting to be worked on) time
■ Running (machining, fabrication, assembly, etc.) time
■ Setup time
■ Waiting (for transportation) time
■ Inspection time
■ Move time
■ Other elements
In a general machine shop (job shop) environment, the first of the elements listed
normally accounts for roughly 90 percent of average total elapsed time. In an individual
case, queue time is a function of a job’s relative prior ity as it finds itself in contention for
a given productive facility with other jobs. The queue time and, consequently, the actual
lead time of the respec tive order will increase or decrease as its priority is changed—the
“hottest” orders spend little time in queue. Actual lead time is usually quite flex ible and
in emergency situations can be compressed to a small fraction of the planned lead time.
An MRP system has an inherent ability, discussed in Chapter 6, to re evaluate all
open order due dates and to indicate changes in work priorities required for the orders
to finish on the dates of actual need irre spective of the originally assigned due dates. The
disparity between planned and actual lead times therefore is of no concern. Planned lead
times serve to time order releases and no more than that.
In establishing planned lead-time values, it is possible to compute them through
more or less elaborate procedures and formulas based on work standards, in-plant trav-
el distances, average or planned queue times, and so on, but the precision thus achieved
is spurious. Lead-time accuracy is indeter minate—the concept is elusive and devoid of
meaning. This is why an empirically derived manufacturing lead time or any reasonable
estimate will do for purposes of MRP. Most methods used, includ ing straight estimates,
yield a fixed lead time that will not vary with the quantity of the order. In cases where
machining time per operation per piece is significant (e.g., turning large shafts, planing