Page 211 - Orlicky's Material Requirements Planning

190 PART 3 Managing with the MRP System

FIGURE 10-8 Maximum

Reducing the
Behind
queue to
Schedule
unneeded work.
On
Schedule
Minimum
Ahead of Ahead of
Schedule Schedule Controlled
Queue

Way Ahead Way Ahead Way Ahead
of Schedule of Schedule of Schedule

No No No
Requirements Requirements Requirements

WORK-IN-PROCESS REVISITED
Work-in-process, in its relation to lead time, traditionally has been viewed as conforming
to the following theorem:
L W/R

where L lead time (in days, weeks, or months)
W work-in-process inventory (in units, hours, or dollars)
R rate of output (per period of L, in units of W)

L 1,200 units/200 units per week 6 weeks
The average lead time arrived at in this way is not always meaningful. When work-
in-process is stratified by priority, the formula will be seen to be in need of modification.
Average actual lead time is a function of the live portion of work-in-process and of the
rate of production. For example:
Active queues: 800
Deferred requirements: 300
No requirements: 100
Total 1,200

L 800 in (active) process/200 units per week 4 weeks

Work-in-process and lead time codetermine one another. This is a kind of chicken-
and-egg relationship, and the difficulty with the preceding equation is that it assumes
that work-in-process (or, in another version, lead time) is given. In reality, of course,
work-in-process is variable, and its level is a function of the relationship between input