Page 249 - Orlicky's Material Requirements Planning

228 PART 3 Managing with the MRP System

■ A part of the demand expressed in the schedule of factory requirements may be
met from plant inventory.
■ Product lot-sizing considerations, important from the manufacturing point of
view, are obviously not reflected in the schedule of factory requirements. The
demand is shown by quantity and date without regard for production econom-
ics. In the process of developing the MPS, product lot sizes are established that
may deviate in both quantity and timing from the requirements of the various
sources of demand. Additional lot sizing may take place subsequently at the
component-item level.

The load represented by the schedule of factory requirements either may exceed
productive capacity or be below the capacity to which the plant is committed. This load
may fluctuate excessively. The schedule of factory requirements may be stated in terms
of product models that will have to be translated into end-item BOM numbers. The
schedule of factory requirements may not specify optional product features the demand
for which must be forecast before being incorporated into the MPS.
The schedule of factory requirements serves as the basis for final preparation of the
MPS, which constitutes the third and final step in MPS development. Thus a specific
manufacturing program is created that will then be processed by the MRP system to plan
all subsequent component procurement, fabrication, and subassembly activity. In trans-
forming the schedule of factory requirements into an MPS, the predominant considera-
tion is that of capacity availability. The process and techniques used to achieve a balance
between load and capacity over the long horizon are described next.

Resource Requirements Planning
An MPS must be considered in relation to the load it places on available or planned
resources, including capacity, space, and working capital. If available resources are not
adequate to meet the requirements represented by a given MPS, they must be increased,
or the schedule should be reduced. Unless solid planning of resource requirements takes
place before the planning of production, there is a likelihood of failure in delivery service,
a logjam in work-in-process, a disruption in the production control system, and increased
manufacturing costs.
The resource requirements planning concept entails a long-range planning function
intended to keep in balance the ability to meet demand and a reasonably level load on
the company’s resources. The technique of resource requirements planning consists of
five steps as follows:

1. Defining the resources to be considered
2. Computing a load profile for each product that indicates what load is imposed
on what resources by a single unit of the product
3. Extending these profiles by the quantities called for by a proposed MPS and
thus determining the total load, or resource requirement, on each of the
resources in question