Page 285 - Orlicky's Material Requirements Planning

264 PART 3 Managing with the MRP System

Pegged requirements may be thought of as a selective where-used file. In comparison
with a regular where-used file, which lists all parents of a component item, a pegged
requirements file lists only the parents that show planned orders (the source of compo-
nent gross requirements) in their records. This permits the inventory planner to trace
requirements upward in the product structure to determine which parents a given gross
requirement came from, where their requirements came from, and so on. By following the
pegs from one item record to another, the planner can trace the demand to its ultimate
source, that is, a specific bucket (or buckets) in the MPS.
Requirements pegging is effected by establishing a so-called peg record for each
component item in which the breakdown, or detail, of gross requirements is recorded by
period and tied to its source. An example is provided in Figure 14-2. Here, the demand
for item X comes from parent items A, C, and D and from an interplant or service-part
order. Pegging provides a capability of specialized inquiry for the benefit of the invento-
ry planner.
The preceding discussion of pegged requirements covers the so-called single-level
peg, that is, the ability to trace the source of item demand to the immediately higher level
only. With the single-level peg, a succession of peg inquiries is required to trace item
demand to an end-item lot (or lots) called for by the MPS. In order to link item demand to
that schedule by means of a single inquiry, the so-called full-peg capability would be
required. Under the full-peg approach, each individual requirement for a component item
is identified with a specific product (or end-item) lot or customer order listed in the MPS.
This principle can be extended to orders and even on-hand quantities of the com-
ponent item so that it always may be known which group of parts “belongs” to which
product lot. It is rarely practical to program a full-peg capability, however, because in
most manufacturing environments it is intended that individual requirements for a com-
ponent item stemming from multiple parents be combined, that an order cover multiple

FIGURE 14-2
Requirements Record – Item X
Pegged Period 1 2 3 4 5 6
requirements.
Gross
Requirements 20 35 10 15

Peg Record – Item X
Period Period Parent Record External Order
1 20 A
3 15 A
3 20 C
4 10 No. 38447
6 15 D