Page 203 - Orlicky's Material Requirements Planning

182 PART 3 Managing with the MRP System

tions to problems that not only could not have been solved in the past but that no one at
the time could conceive how to solve.
The essence of the production and inventory control problem in the past was not so
much a lack of ability to plan as to replan—to respond to change. Today, there exists the
capability to update for change easily, quickly, and correctly, thanks to the computer and
the techniques of time-phased material requirements planning (MRP). This capability of
timely replanning in response to change now must be examined in all its implications.
The time has come to rethink certain traditional concepts, axioms, and theorems. Many
of these are no longer relevant or valid because they fail to take into account the recent
great enhancement in the ability to update for change. Traditional views that now must
be revised pertain to the following topics:
■ Manufacturing lead times
■ Safety stock
■ Queue analysis and queue control
■ Work-in-process
■ Forecasting of independent demand

These now appear in a new light, and the discussion in this chapter will attempt to
describe this environment given currently available technology.

PLANNED VERSUS ACTUAL
MANUFACTURING LEAD TIME

In the classic problem environment of a job shop or general machine shop, the queue-
time element of lead time may account for 90 percent or more of the total time elapsed. It
is by compressing queue time that the overall lead time can be reduced. In the case of an
individual shop order, it is important to distinguish between:
■ Planned lead time
■ Actual lead time
Planned lead time is the value supplied to the MRP system, and it is this lead time that
the system uses for planning order releases. The original due date of an order reflects the
planned lead time. Actual lead time reflects a revised due date that coincides with the date
of actual need, if the latter has changed since the time of order release. The difference
between the two lead times, planned and actual, can be major.
For example, at a plant producing a line of machinery, where all fabricated parts,
large or small, traditionally had been allowed a 12-week lead time, the largest component
items that required the most machining operations were a group of large steel shafts. The
several product models required one such shaft each, different shafts being used in the
assembly of different models. One day an assembly-line foreman noticed that the avail-
able supply of shafts used on the model being built at that time was low. A quick count
indicated that the supply would run out by about 10 o’clock the next morning. An expe-