Page 278 - Orlicky's Material Requirements Planning

CHAPTER 13 More Than an Inventory Control System 257

When planned orders do not enter into the load report, the indicated load is bound
to decline following the current period and to trail off at a point that roughly corresponds
to the span of the average item lead time. This type of load projection is incomplete in a
way that offers very little “visibility” into the future beyond the current period. This is
such a serious shortcoming that it all but defeats the purpose of projecting the work load.
Because capacity-related corrective action, such as hiring or subcontracting, entails a lead
time of its own, the very information that would be most desirable, that is, a valid load
picture several periods in the future, is missing.
The big “bulge” in behind-schedule and current-period load is a sure indication that
priorities are not being kept valid. A good portion of the load classified as behind sched-
ule is likely not really behind schedule if requirements have been changing. The order
due dates and operation dates simply have not been revised to reflect this. The same will
be true for at least some of the work that constitutes the overload in the current period.

Usefulness of a Load Projection
A good, usable load projection has the following three attributes:

1. It is complete.
2. It is based on valid priorities.
3. It provides visibility into the future.
Under any inventory control system other than MRP, the load report tends to fail on
all three counts, if it is being generated at all. Its usefulness is limited in practice to com-
paring successive load reports for the purpose of trend detection. Capacity-adjustment
action practically always lags behind the actual load development. Owing to the load
report not being trustworthy, the plant usually must get into actual trouble before man-
agement takes corrective action.
An MRP system has the potential for helping to solve the capacity requirements
planning problem. An MRP system generates planned orders that can be converted into
load and added to the load created by open orders. Whatever method is used to convert
released orders into load can be used for planned orders as well. This satisfies the require-
ments of completeness and visibility because the entire planned-order schedule (span-
ning the full planning horizon) may be input to the scheduling and loading system.
The requirement of validity can be satisfied only if the MRP system is being used as
a priority-planning system. When open-order due dates are being revised to stay valid,
the entire load projection can be based on valid priorities because the MRP system main-
tains the timing of planned orders continually up to date.
The MRP system does not itself plan capacity requirements, but it provides input to
a capacity requirements planning system, without which the latter cannot possibly func-
tion effectively. The load projection or capacity requirements report that is based on the
outputs of an MRP system exhibits the kind of pattern illustrated in Figure 13-4.
Depending on operations-scheduling practice, behind-schedule load may or may not dis-