Page 276 - Orlicky's Material Requirements Planning

CHAPTER 13 More Than an Inventory Control System 255

In the preceding discussion of priorities, the emphasis was on manufactured items and
on shop orders because they involve operation priorities, which is not the case with pur-
chase orders. Everything that has been said about priorities of shop orders, however, applies
equally to purchase orders. Purchased component items have dependent priorities, the same
as manufactured items, and they should, of course, be planned by the MRP system.

DETERMINING CAPACITY REQUIREMENTS
In Chapter 6, the point was made that an MRP system is capacity-insensitive and prop-
erly so because its function is to determine what materials and components will be need-
ed and when in order to execute a given MPS. There can be only one correct answer to
this, and it cannot therefore vary depending on what capacity does or does not exist. The
MRP system can be thought of as assuming that capacity considerations have entered
into the makeup of the MPS, that is, that the MPS being submitted to it for processing is
realistic vis-à-vis available or planned capacity.

Capacity Requirements Planning
The term used in connection with long-range planning of capacity at the MPS level is
resource requirements planning, and this function was discussed in Chapter 12. Capacity
requirements planning is the function of determining what capacities will be required by
work center by period in the short-to-medium range to meet current production goals.
The output of the MRP system indicates what component items will have to be produced
and when, and this output therefore can be converted into the capacities required to pro-
duce those items.
Such a conversion results in a machine load, or work load, projection that is then
compared with available departmental and work-center capacities to help answer the
day-to-day operating questions, such as:

■ Should we work overtime?
■ Should we transfer work from one department to another?
■ Should we transfer people from one department to another?
■ Should we subcontract some work?
■ Should we start a new shift?
■ Should we hire more people?
The tool that has been used traditionally to provide information on which answers
to the preceding questions could be based is the so-called load report. This report is gen-
erated by the scheduling and loading system, which schedules individual operations of
orders being released, converts the scheduling into hours of work load, and accumulates
them by work center by period. The traditional load report reflects only the backlog of
open orders, and the typical load pattern (for a work center, a department, or a plant)
looks like that shown in Figure 13-3.