Page 204 - Orlicky's Material Requirements Planning
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CHAPTER 10      A New Way of Looking at Things                                  183


        diter was sent to look for a replenishment order in the machine shop but could find none.
        He called the responsible inventory planner, who, on consulting his records, informed the
        expediter that for some reason or other there were no outstanding orders for the shaft in
        question. Everyone understood that if more shafts could not be produced by the next
        morning, the assembly line would have to be shut down. Some 100 men would have to
        be sent home at full pay according to the union contract, not to mention the loss of pro-
        duction. The reaction to this threat was swift and decisive. While the shop-order paper-
        work was being prepared, a truck was dispatched to the nearest steel warehouse to pick
        up raw material for the shafts. An emergency order was launched promptly in the shop,
        and an expediter was assigned to stay with the order and see that it moved from opera-
        tion to operation without delay. The shafts were produced overnight. They were rather
        expensive shafts because the way had been cleared for them in the shop by tearing down
        existing setups on all the machine tools required for performing the work, but the assem-
        bly line was kept going. At that time, the shaft that had a planned lead time of 12 weeks
        was made in one day. At another time, the same shaft had been in process for six weeks
        when management changed the master production schedule (MPS) and moved the
        respective product lot six months back. The shaft’s actual lead time then turned out to be
        30 instead of 12 weeks. Still later, another product lot was rescheduled into the next fis-
        cal year, when a new model design would be effective and the particular shaft would no
        longer be used. The shafts in process at the time of the schedule change were never fin-
        ished (they were scrapped eventually and written off), and thus their actual lead time
        proved to be incalculable—infinite.
             The planned lead time was 12 weeks, but actual lead time varied from one day to
        infinity. What determined actual lead time was, of course, priority. When the shaft was
        being manufactured overnight, it had the highest priority in the house. The following
        definitions may be formulated by generalizing from this example:
             ■ Individual planned lead time represents an estimate of the time that will elapse
                between start and completion of an order. This lead time is used in the planning
                process, and it determines order release.
             ■ Individual actual lead time is a function of order priority. However, there can be
                steps in the process that cannot be compressed simply due to priority. The book,
                The Mythical Man Month, made famous the observation that nine women work-
                ing together no matter how motivated cannot produce a baby in one month.
             With MRP, individual actual lead times are determined by the order due dates
        established and revised by the system. The need for revision is detected as early as it aris-
        es, which mitigates extremes in the lead time, such as those related in the preceding story.
        While it is true that individual actual lead time is a function of priority, it must be remem-
        bered that priority is relative. The lead time of only a small number of orders (those with
        highest priority) can be significantly compressed at any one time in view of limited
        capacity. Individual actual lead time (for a specific order) therefore should be distin-
        guished from average actual lead time.
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