Page 177 - Orlicky's Material Requirements Planning

156 PART 2 Concepts

orders have to be computed and that requirements for a given item tend to change and
cause constant recomputations, computational time, once a record is in the computer’s
main memory, is not significant.
The second argument, however, is entirely valid. The complexity of the procedure
inhibits understanding by the layperson and acts as an obstacle to its adoption in prac-
5
tice. An inherent weakness of the Wagner-Whitin algorithm lies in its assumption that
requirements beyond the planning horizon are zero. The technique is designed for a sta-
tionary horizon. It would work well, for instance, in the case of custom-designed parts in
a limited number of situations, such as a one-time contract for a quantity of special
machinery with a firm, staggered delivery schedule. In most cases, though, the planning
horizon is not stationary, the life of the typical inventory item is quite long, and addi-
tional requirements are constantly being brought within the planning horizon by the pas-
sage of time.
Whenever a new requirement appears at the far end of the planning horizon, the
Wagner-Whitin ordering strategy (which, by definition, pertains to the entire planning
horizon) may have to be revised. At least one lot at the far end of the series is subject to
recomputation even if the specific requirements it covers remain unchanged. The validi-
ty of a given planned-order quantity computed under this approach may prove ephemer-
al, lasting no longer than one planning period. This, of course, is true with some of the
other algorithms as well.
In practice, the Wagner-Whitin optimal strategy proves to be wrong if it has to be
changed subsequently. From an MRP point of view, instability in the planned-order
schedule is undesirable. To the extent that Wagner-Whitin is more sensitive than other
lot-sizing techniques to additions of requirements caused by the extension of the hori-
zon—owing to its optimal strategy objective—it loses its practical appeal.

LOT-SIZE ADJUSTMENTS

The planned-order quantity determined by any of the lot-sizing techniques is subject to
certain adjustments dictated by practical considerations. Among these are the following:

■ Minimums and maximums
■ Scrap allowances
■ Multiples
■ Raw materials cutting factors
Any of the lot-sizing algorithms discussed previously can be constrained by the
imposition of minimums and/or maximums on the quantity of the item to be ordered.
One type of minimum has already been mentioned; that is, the computed quantity, if
lower than the net requirements in the period to which the order is keyed, will be
increased to at least equal the net requirements. Minimums and maximums may be stat-

5 G. W. Plossl and O. W. Wight, MRP by Computer. Washington, DC: American Production and Inventory Control
Society, 1971, p. 9.