Page 158 - Orlicky's Material Requirements Planning

CHAPTER 7 Processing Logic 137

separate service-part department, independent of the production control manager. A sep-
arate, different inventory control system evolves for service parts. Finally, the service-part
organization operates its own warehousing and distribution facilities geographically
remote from the plant that manu factures the parts.
The installation of an MRP system by the plant tends to reverse this trend. First, the
service-part organization comes under pressure to adopt the time -phased order-point
approach so that the plant might have better visibility into future service-part require-
ments. The two previously disparate inven tory systems become compatible and then, in
effect, two parts of one (MRP) system. With good planning and control of inventories, the
former justi fication for physically segregating the inventories no longer exists. A con -
solidation of these inventories results in a lower level of total inventory investment. Stock
is freely “borrowed” between production and part service, but under control by the MRP
system, which simply (and impartially) al locates existing stock to production and ser-
vice-part requirements in time sequence of actual need. The result is improved customer
parts service and fewer production shortages.

ENTRY OF EXTERNAL-ITEM DEMAND
In the typical manufacturing environment in which an MRP system would be used, the
bulk of the component-item demand derives from the MPS and is generated internally
through the requirements planning (explosion) process. At least some of the demand for
components, however, normally also comes from sources external to the plant (e.g., ser-
vice-part and interplant requirements) or nonproduction sources within the plant (e.g.,
experimental, quality-control, and plant maintenance re quirements). The demand, if any,
in the latter category is usually minimal and sporadic, not warranting separate planning
or forecasting. Service-part and interplant demand, on the other hand, may be both sig-
nificant and re curring. This demand is conveyed to the MRP system in one or more of the
following forms:

1. Entry of orders placed by a service warehouse
2. Entry of orders placed by another plant
3. Forecasting of service-part demand
4. Processing of planned-order schedules of a service warehouse time- phased
order-point system
5. Processing of planned-order schedules of another plant’s MRP system

Entry of Orders
Service-part and/or interplant orders are entered into a plant’s MRP system by means of
transactions that increase gross requirements of the item in question in the period corre-
sponding to the order due date. Gross requirements stemming from parent planned
orders and those generated by external-demand sources thus are consolidated, and the