Page 155 - Orlicky's Material Requirements Planning

134 PART 2 Concepts

duce” the end items by releasing each such order in due time and scheduling its com-
pletion. In a make-to-stock manu facturing operation, where the time-phased order-point
approach is used to control finished-goods inventory, the planned-order schedules of the
stocked items constitute, collectively, the MPS. Here, the firm planned-order technique
would be used to space the planned orders so as to level the load on the plant. The time-
phased order point and its uses will be reviewed in the next section.

TIME-PHASED ORDER POINT
Time-phased order point is an approach that allows time-phasing techniques to be used for
the planning and control of independent-demand items. The demand for such items has to
be forecast, and their supply normally would be controlled by means of order points.

Conventional Order Point Versus Time-Phased Order Point

For an example, a service part supplied from factory stock might have the following plan-
ning factors:

Lead time L = 2
Safety stock S = 100
Period-demand forecast F = 17
Order quantity Q = 50

The order point then would be determined as follows:
S (F L) 100 (17 2) 134

The same example, in time-phased format, is shown in Figure 7-16. The forecast is
projected over the entire planning horizon and represents gross requirements. The cur-
rent quantity on hand of 170 will have dropped below safety stock of 100 in period 5, and

FIGURE 7-16
Forecast
Period
Time-phased
order point.
Item A – Level 1 1 2 3 4 5 6 7 8
Gross Requirements 17 17 17 17 17 17 17 17
Scheduled Receipts
On Hand 170 153 136 119 102 85 68 51 34
Planned-Order Releases 50 50

Lead Time Offset
Order Point Safety Stock
Reached Reached