Page 160 - Orlicky's Material Requirements Planning

CHAPTER 7 Processing Logic 139

Instead of con veying their requirements by means of actual orders, the customer organi-
zations simply submit schedules of planned orders for processing by the supplying
plant’s MRP system. This represents the most desirable and most effective method of reg-
istering external demand with the supply ing plant because it provides maximum visibil-
ity of future requirements.
The principle of feeding the output of a customer system directly to the supplying
plant’s MRP system also extends to the company’s product ware houses or distributor-
ships and to actual customers who operate MRP sys tems of their own. In both cases, the
precondition for thus interfacing the systems is a product that appears as an end item in
the supplying plant’s MPS and has an item inventory record in the plant’s system or a
method to link the two records. The use of this method of conveying demand has
increased dramatically because of its many advantages to both trading partners.
When a warehouse’s time-phased order-point system or another plant’s MRP system
interfaces directly with the supplying plant’s system, two time -phased inventory records
of the same item are logically linked in a pseudo– parent-component relationship. Let us
take an imaginary service part X that has a record in a time-phased order-point system and
another record in the supplying plant’s MRP system, as illustrated in Figure 7-17.
At the warehouse-system level, item X acts as a pseudoparent item, linked by its
planned-order release schedule to the gross requirements schedule of pseudo–component
item X at the plant system level. The two records of item X are, as it were, put one on top
of the other. When this is done, inde pendent demand for the item at the warehouse level
is translated by the system’s processing logic into dependent demand at the plant level.
Because the item in question has two time-phased inventory records, its normal lead
time must not be duplicated but rather divided between the records. At the parent level,

FIGURE 7-17
Item X Period
Pseudo–parent- Safety Stock: 20
component Lead Time: 1 1 2 3 4 5 6
relationship.
Gross Requirements 10 10 10 10 10 10
Scheduled Receipts
On Hand 48 38 28 18 8 –2 –12

Planned-Order Releases 30 30
Item X
Lead Time: 4

Gross Requirements 30 30
Scheduled Receipts 30
On Hand 5 5 5 5 5 –25 –25
Planned-Order Releases 25