Page 281 - Orlicky's Material Requirements Planning

260 PART 3 Managing with the MRP System

2. Priorities:
■ Order with the right due date.
■ Keep the due date valid.
3. Capacity:
■ Determine a complete load.
■ Determine an accurate (valid) load.
■ Allow an adequate time span for visibility of future load.

A full and proper use of the MRP system, represented by the preceding checklist,
will prove difficult or impossible unless the system’s design anticipates such use. The
intended use of the system therefore should dictate a number of critical design decisions,
in particular:
1. The span of the planning horizon
2. The size of the time bucket
3. The coverage of inventory by class
4. The frequency of replanning
5. The traceability of requirements
6. The capability to “freeze” planned orders

Planning-Horizon Span

For purposes of inventory ordering, the planning horizon should at least equal the
(longest) cumulative product lead time, as defined in Chapter 7. If the horizon is shorter
than this, the MRP system will be unable to time releases of planned orders for items at
the lowest level correctly, with the result that orders for such items (e.g., purchased mate-
rials and component parts) will be consistently released too late. The system, in succes-
sively offsetting for lead time in the course of the level-by-level planning process, simply
runs out of available time when it reaches the items on the lowest level. This is due to a
lack of information input to the system rather than a computing constraint.
This is illustrated in Figure 14-1, where the cumulative lead time is 15 periods and
the planning horizon is 13 periods. The order for purchased material, developed by the
system through explosion of an end item inserted into the master production schedule
(MPS) at the very edge of the planning horizon, should have been released two periods
ago, based on the lead-time values supplied to the system. The best the system can do,
under these circumstances, is to plan the order release for the current period. The order
then is two periods behind schedule before it is even released.
Because of the multilevel product structure and successive lead-time offsetting,
there is a partial loss of horizon at lower levels. The effective planning horizon is succes-
sively diminished as the planning process progresses from one level to the next. The
lower the level, the less visibility there is into the future. For example, in Figure 14-1, a
planned-order release for the fabricated item never can be farther out than period 3. The