Page 207 - Orlicky's Material Requirements Planning
P. 207
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