Page 222 - Orlicky's Material Requirements Planning

CHAPTER 11 Product Definition 201

parent items. An example of this is a subassembly built on a feeder line that flows direct-
ly into the main assembly line. Here the subassembly normally carries a separate identi-
ty. Because it is recognized in the BOM, the MRP system would treat it in the same way
as any other subassembly. This may be undesirable because if this kind of item is planned
under an MRP system, its logic assumes that each component item goes into and out of
stock and that all receipts and disbursements are being reported. This is the way the time-
phased inventory record is designed and updated, and the question arises as to how to
handle such subassemblies within an MRP system. Additional detail can be found in
Chapters 15 and 18.
A transient subassembly would not have to be identified in the BOM at all if there
were never an overrun, a customer return, or service part demand. Otherwise, it must be
separately identified in the BOM, and its inventory status must be maintained. In MRP
systems of the net-change variety, this would pose a particular problem because all trans-
actions for transient subassemblies would have to be reported continuously to the system
to maintain the respective inventory records up to date. This is really quite unnecessary
and a waste of effort in the case of order releases, order completions (receipts), and dis-
bursements in view of the ephemeral existence of transient subassemblies. Fortunately,
there is no need to do this, thanks to a technique called the phantom BOM. While trans-
actions of the type mentioned do not have to be reported and posted under this approach
(this applies to assembly activities but not to stockroom receipts and disbursements), the
system will pick up and use any transient subassemblies that happen to be on hand.
Service-part requirements also can be entered into the record and will be handled cor-
rectly by the system. Otherwise, it will, in effect, bypass the phantom item’s record and
go from its parent item to its components directly.
To describe the application of this technique, let us assume that assembly A has a
transient subassembly B as one of its components and that part C is a component of B.
This item B, for purposes of illustration, the phantom, is envisioned as being sandwiched
between A, its parent, and C, its component. To implement this technique, the transient
subassembly is treated as follows:
1. Lead time is specified as zero.
2. Lot sizing is lot for lot.
3. The BOM (or the item record) carries a special code so that the system can rec-
ognize that it is a phantom and apply special treatment. The special treatment
referred to means departing from regular procedure, or record update logic,
when processing the phantom record. The difference between the procedures
can best be described through examples.

In Figure 11-2, inventory status data for items A (top), B (middle), and C (bottom)
are shown. Note that the zero-lead-time offset on the item in the middle places the
planned-order release for 18 pieces in the same period as the net requirement. This, in
turn, corresponds to the requirement for 18 C’s in the same period.