Page 253 - Orlicky's Material Requirements Planning

232 PART 3 Managing with the MRP System

FIGURE 12-4
Master Production Schedule
Relating
production End-Item Lot
problems to the
MPS.

MRP System

Parent
Planned Order
Inventory Management
Component Problems
Gross Requirement • Lack of coverage
of net requirements
Component • Lack of lead time to
Net Requirement cover net requirements

Open Open
Purchase Order Shop Order

Procurement Problems Manufacturing Problems
• Delivery past due • Shop order past due
• Quality rejection • Scrap
• Vendor’s inability to deliver • Inability to proceed with process
• Overload

horizon, it is to help decide what additional capacity, if any, will have to be added and
when.

CLOSING THE LOOP
In managing the MPS and in using it to manage inventories and production, the follow-
ing basic “law” always should be observed:

The MPS should be a statement of what can and will be produced rather than
what management wishes had been produced in the past and/or would like
to be able to produce in the immediate future.

This law, which stipulates that the MPS must be realistic, is still honored mostly in
the breach. This is a result of long tradition because in the past—before computers and
before MRP—the realism of an MPS was not easily ascertained or measured. The sched-
ule simply set a goal that everyone in the plant was supposed to scramble to reach. The
pressure that the MPS exerted to “get the product out the door” by keeping the manu-
facturing organization under pressure and off balance was considered by management to
be beneficial, and it still often is. This approach to managing production employs what