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186                                                 PART 3      Managing with the MRP System


           FIGURE 10-3
                                Planned Lead Time: 4
           Safety stock:        Safety Stock: 20
           demand exceeds
           forecast in          Period           1      2       3     4
           second period.
                                Forecast        10      10     10     10

                                Actual          20      20


                                                                        Replenishment
                                                                            Order
                                         40
                                                30
                                Order
                                Point
                                Logic

                                         20             20
                                                10             10






                                         40
                                MRP             20
                                Logic

                                         20     20      20




        jection of safety stock and the position of the replenishment order will vary if actual
        demand exceeds forecast.
             This is shown in Figure 10-2, where actual demand in the first period has turned out
        to be 20 rather than the forecast 10. Under statistical order point, the excess demand is
        thought of as having been met from safety stock; the timing of the replenishment order
        continues unaffected. Under time-phased order point, the system has reacted by moving
        the due date of the order one period forward, which keeps the safety stock at the origi-
        nal 20.
             Figure 10-3 shows what happens if actual demand also exceeds forecast in the sec-
        ond period. Under statistical order point, safety stock is considered used up, and the
        order due date remains firm. Under time-phased order point, the replenishment order
        is rescheduled again, and safety stock remains at 20. It can be seen that if demand in
        periods 3 and 4 is as forecast, inventory under statistical order point will be depleted
        but not under time-phased order point. The latter technique strives to preserve safety
        stock intact. Provided that the replenishment order actually can be completed as
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