Page 150 - Orlicky's Material Requirements Planning

CHAPTER 7 Processing Logic 129

FIGURE 7-10
Period
Explosion of
requirements. Item A – Level 1 1 2 3 4 5 6 7 8 9
Gross Requirements 10 15 10 20 5 10 15
Scheduled Receipts 14
On Hand 12 2 2 1 –9 –29 –34 –34 –44 –59
Planned-Order Releases 9 20 5 10 15

Item B – Level 2

Gross Requirements 9 20 5 10 15
Scheduled Receipts
On Hand 28 28 19 –1 –6 –6 –16 –31 –31 –31
Planned-Order Releases 1 5 10 15

Item C – Level 3
Gross Requirements 1 5 10 15
Scheduled Receipts
On Hand 8 7 2 2 –8 –23 –23 –23 –23 –23
Planned-Order Releases 8 15

In this example, component items B and C do not have multiple parents; that is, they
are not common-usage items. In the real situation, however, multi ple parents can be
expected to exist, particularly for low-level items. If the explosion progressed in the man-
ner shown in Figure 7-10, that is, straight down from item A to its immediate components
and from those to their compo nents, the results would have to be recomputed as subse-
quent explosions of high-level items revealed common usage of items B and C (and other
com ponents of A). While the final result would be the same, the data-processing efficien-
cy would be unnecessarily low.
The downward progression from one product level to another just described is
called an explosion. Net requirements are developed by applying quantities of each item
on hand and on order to meet gross requirements for the item at each level. This netting
process may seem laborious, but it cannot be circumvented or shortcut; net requirements
on the parent level must be determined before the correct gross and net requirements on
the component level can be determined.
To cover net requirements, the MRP program develops a time-phased schedule of
planned orders for each item, including orders, if any, to be released immediately plus
orders scheduled for release in specified future periods. Planned-order schedules will be