Page 243 - Orlicky's Material Requirements Planning

222 PART 3 Managing with the MRP System

Definitions

An MPS should not be confused with a forecast. A forecast represents an estimate of
demand, whereas an MPS constitutes a plan of production. These are not necessarily the
same. A distinction therefore should be maintained between the functions of developing
a forecast and laying out a schedule of production despite the fact that in some cases the
two may be identical in content.
An MPS is a statement of requirements for end items by date (planning period) and
quantity. In Chapter 11, an end item was defined as the highest-level item (i.e., an item that
is not a component of any parent) recognized in the bill of material (BOM) that the MRP
system uses for exploding requirements. There must be a correspondence between such
items in the BOM and the terms in which the MPS is stated. End items may be products,
major assemblies, groups of components covered by pseudo-BOMs (see Chapter 11), or
even individual parts used at the highest level in the product structure. A component
item may double as an end item when it is subject to service part, interplant, or other
demand from sources external to the plant. Orders and/or forecasts for all external-
demand items are technically part of the MPS, although they are not normally listed in
the formal document but exist in the gross requirements schedules of the respective
inventory records.
Where the product line consists of complex assembled products with many option-
al features, it is not practical to state and maintain an MPS serving as input to the MRP
system in terms of the products (product models) themselves for reasons discussed at
some length in Chapter 11. In such cases, the schedule is expressed in terms of major com-
ponents rather than end products. For example, a machine tool manufacturer would
specify in its MPS the quantities of columns, knees, tables, beds, and other major assem-
blies from which individual machine tools eventually will be built to customer order.
The format of an MPS is normally a matrix listing quantities by end item by period.
The meaning of these quantities in relation to the timing indicated is fixed by conven-
tion—in a given case, it may represent end-item availability, end-item production, or end-
item component availability. Depending on which one it is, the form of interface between
the MPS and the MRP system is affected, as discussed in Chapter 7.
The sales forecast and the MPS that management and the marketing organization
use are often developed and stated in terms of weeks, months, or quarters, however.
They are usually also stated in terms of product models. The MPS then must be broken
down and restated in terms of days and weeks and specific end-item numbers. Thus it
may exist in two versions or layers, as illustrated in Figure 12-1.
The period of time that the MPS spans is termed the planning horizon (discussed in
Chapters 7 and 14), and it may be divided into a firm portion and a tentative portion, also
indicated in Figure 12-1. The firm portion is determined by the cumulative (procurement
and manufacturing) lead time. It is not necessarily firm in the sense of being “frozen,” but
it does represent quantities of end items committed to and started in manufacture.
For the MPS, the frequency of maintenance (i.e., updating or revision) usually is
geared to the forecasting cycle, which is almost always monthly. Between these “official”