Page 151 - Orlicky's Material Requirements Planning

130 PART 2 Concepts

revised by the computer when the MRP program is rerun if there have been changes in
any of the parameters involved (e.g., product structure, MPS, on-hand inventory, etc.).
Planned-order quantities are computed using lot-sizing rules (see Chapter 8) specified by
the system user for each item.
MRP netting applies existing on-hand quantities to meet item gross requirements.
MRP also reevaluates the validity of the timing of any released (open) orders that may
now be needed earlier or later than previously scheduled. Good business practice leaves
to planners the decision about rescheduling open orders; computers simply send a mes-
sage recommending this. In its entirety, the information on item requirements and cover-
age that MRP generates is called the material requirements plan. MRP works with three
types of orders—planned, released (scheduled receipts), and firm planned—and handles
them quite differently.
The standard technique for maximizing processing efficiency is to process all the
items on a given level before addressing their components on the next-lower level. This
is known as level-by-level processing. Under this approach, planned orders are developed
for all the items on level l so that they may be consolidated for purposes of determining
gross requirements for any common components on level 2. This means that each item
inven tory record is retrieved and processed only once. When a given item appears on
more than one level of the product structure, low-level coding (discussed in Chapter 5)
will cause the processing of its record to be delayed until the lowest level on which the
item finds itself is processed. There is no logical requirement for low-level codes in MRP;
their absence will not prevent the program from arriving at correct results. Use of low-
level codes yields higher computer-processing efficiency, which usually outweighs the
cost of developing and maintaining the coding. Practically every BOM processor soft-
ware program does this automatically. The level-by-level approach to MRP is illustrated
in Figure 7-11.
Level-by-level computation of requirements by MRP minimizes the problem of han-
dling multiple-parent demands. If a component appears on only one level in the product
structure, all its parents will be on the next-higher level. Because all items on each level

FIGURE 7-11

Level-by-level processing.
1st Pass
A X Y

2nd Pass
B B

3rd Pass
C C C