Page 283 - Orlicky's Material Requirements Planning

262 PART 3 Managing with the MRP System

uct lot is not actually committed at one time (as the authorization procedure implies), and
cost is being incurred gradually, as dictated by individual-item lead times. It is one of the
advantages of working with an MRP system that management need not be concerned
with authorizing individual product lots for production. All that is required is to main-
tain the best possible MPS at all times and to let the MRP system do the rest. The useful-
ness of this system should not be impaired by arbitrary interference and unnecessary
delays in authorization.

System Coverage of Inventory Classes

Coverage of inventory by class is another important decision that the system user must
make. The ABC classification of inventory was discussed in the Introduction to this book,
where it was noted that an MRP system is capable of according the same stringent treat-
ment to any inventory item regardless of class. An MRP system user may feel, however,
that C items do not warrant such elaborate treatment, and he or she may exclude them
from the system. There also exist MRP systems that cover A items only, on the theory that
if the most important and expensive inventory items are planned and controlled proper-
ly, the rest will take care of themselves, more or less. This is simply not so.
MRP systems that are limited in inventory-item coverage yield only a small fraction
of the benefits they are capable of. Such systems cannot displace the informal system that
always has been and under these circumstances will continue to be the modus operandi
of the factory. For purposes of assembling the product, the lowly C item is as important
as an A item. Both must be available in the right quantity at the right time. Furthermore,
some A items have components classified B and C, and shortage of one of the latter will
prevent the completion of the A item. As pointed out earlier in this book, no matter how
much C item safety stock there may be under an order-point approach, there will be occa-
sional shortages. As to priority planning, unless all manufactured items are covered by
the MRP system, relative shop priorities cannot be established. A manufactured C item
must be manufactured in the shop and must contend for productive capacity with A and
B items. Unless a C item order due date is maintained up to date through the MRP sys-
tem, its validity is always questionable, but it will never do to assume that A items have
automatic priority over C items.
Unless the dates of actual need for both an A item and a C item are known, it is obvi-
ously impossible to tell which has priority over which. Here again, shortages and expe-
diting will have to establish what the real priorities are.
Purchased C items, when excluded from the MRP system, do not necessarily affect
the priorities of other purchase orders, and they may be considered the exception to the
rule that an MRP system should cover all classes of inventory for purposes of priority
planning. The C item purchase-order due dates in this case will tend to be invalid, how-
ever, causing some shortages and last-minute expediting.
Another reason why no inventory class should be excluded from system coverage
lies in capacity requirements planning. All manufactured items A, B, and C must be cov-