Page 248 - Orlicky's Material Requirements Planning

CHAPTER 12 Master Production Schedule 227

way as customer orders. In most cases, however, the difference lies in the practice of deal-
ers and distribution warehouses of indicating their requirements (quotas) in advance of
orders actually being issued. These advance commitments normally are stated in terms
of product models without specific choices of optional features. Then these have to be
forecast, for master scheduling purposes, by the plant. In the case of simple products
without optional features, planned order schedules of a time-phased order-point system
employed by the warehouse represent demand on the plant.
Service-part requirements by either customers or a service warehouse normally
bypass the MPS development process. They are entered in the form of either forecasts or
orders directly into the respective inventory records. An exception might be the case of
large, expensive service-part assemblies that would be master scheduled along with reg-
ular products. Where a service warehouse uses time-phased order point, requirements
are best conveyed via the planned-order schedules of the warehouse system.
Forecasts in some cases may constitute a source of requirements placed directly on
the plant. In many manufacturing businesses that either ship directly to customers from
a factory warehouse or assemble to order, a sales forecast is the sole source of production
requirements reflected in the MPS. In many other cases, however, forecasting also gener-
ates requirements that are being conveyed by the MPS. This pertains to product varia-
tions or to optional product features, which usually are forecast by the plant even though
the MPS is based on commitments for product units by dealers or field warehouses, as
mentioned earlier. In these cases, the exact configurations of optional features are sup-
plied just prior to shipment.
Safety stock, as mentioned earlier, should be planned on the MPS level rather than on
the component level. Safety-stock requirements therefore must be viewed as a separate
source of demand on the plant. Safety stock, in terms of end items, is incorporated into
the quantities stated in the MPS.
Orders for stock may be the principal source of production requirements in cases
where the product is being stockpiled in anticipation of future need. In businesses sub-
ject to highly seasonal demand, products and/or components normally are produced
to stock during the off-season in order to be able to meet the peak demand with a level
load on productive capacity throughout the year. The resulting inventory is known as
stabilization stock.
Interplant orders normally are confined to component items rather than products,
which may include anything from single-component parts to assembled end items
appearing in the MPS. The treatment of these requirements parallels that of service parts.
In cases where the “customer” plant uses an MRP system, this type of demand is con-
veyed more effectively via the planned-order schedules for the interplant items, as was
discussed in Chapter 7.
Demands from all the sources just reviewed, when consolidated, represent the so-
called schedule of factory requirements. The creation of this schedule constitutes the sec-
ond step in the development of the MPS. The latter is derived from the former but is not
necessarily identical to it for the following reasons: