Page 245 - Orlicky's Material Requirements Planning

224 PART 3 Managing with the MRP System

bicycles, vacuum cleaners, and clocks are examples of this situation, in which the ship-
pable product is the end item. Interestingly enough, the MPS and the final assembly
schedule may be identical in the case of highly complex products that are engineered and
manufactured to customer order, such as turbines and weapons systems.
Between these extremes, though, there lies the broad middle ground of complex
products assembled from standard components into a variety of configurations, often to
specific customer order. In this category belong vehicles, machinery of all sorts, electrical
equipment, and a long list of others. Here, the two schedules are distinct. The MPS is
expressed in terms of high-level components (assemblies, etc.), and typically, because of
the disparity between manufacturing lead time (long) and customer delivery time
(short), it must be formulated and committed long before the final assembly schedule is
prepared.
Whereas the typical MPS extends a number of months into the future, the final
assembly schedule usually covers only days or weeks. It is stated in terms of product
models or specific configurations of optional product features, often in serial-number
sequence. The MPS is based on anticipated customer demand. The final assembly sched-
ule responds to actual customer demand and is constrained by the availability of com-
ponents provided by the MPS via the MRP system.
The MPS is essentially a procurement, fabrication, and subassembly schedule. Its
function is to provide component availability, and it therefore may be viewed as a com-
ponent-availability schedule. In this context, the term component means any inventory
item below the end-product level. The MPS may be said to “produce” the mentioned
components in support of the final assembly schedule. This is true to the extent that these
components are part of the BOMs reflected in the MPS. The exceptions to this rule are
items excluded from the planning BOM during the process of modularizing the BOM, as
discussed in Chapter 11. One of the points made there is worth repeating: A given sub-
assembly may be assigned either to the planning BOM (used by the MRP system) or to
the M-bill (used by the final assembly scheduling system). This is tantamount to putting
the item in question under the control of one or the other of these two systems. If the item
is part of the M-bill, the final assembly schedule, rather than the MRP system, is “respon-
sible” for producing it.
This rule extends to selected manufactured items and purchased items, which may
be put under the control of the final assembly scheduling system. Then they will be man-
ufactured or procured as a function of executing the final assembly schedule in corre-
spondingly small lot quantities. Such items are characterized by:

■ High unit cost
■ Short lead time
■ Short assembly lead time of the item’s parent (if any)
■ Absence of significant setup or quantity discount considerations
Examples of component items governed by the final assembly schedule, related to
products referenced in previous discussions, are as follows: A horizontal milling machine