Page 292 - Orlicky's Material Requirements Planning

CHAPTER 14 System Effectiveness: A Function of Design and Use 271

FIGURE 14-8
Week
Solution of
problem of 28 29 30 31 32 33 34 35
coverage.
Gross Requirements 3 7 10 6 8 10 14 10 Fabricated
Part X
Scheduled Receipts
On Hand 38 35 28 18 12 4 –6 –20 –30
Planned-Order Releases 20 25

Firm
Planned
Order

Gross Requirements 20 25
Raw
Material Y
Scheduled Receipts 15
On Hand 5 5 5 20 0 0 –25 –25 –25
Planned-Order Releases 25

ning, the two records appear as in Figure 14-8. The problem is solved, and an order for
25 units of item Y will be released under normal lead time. Note that because the planned
order for item X has been reduced, the MRP system has compensated by moving the next
planned order in the parent record forward. In the real situation, the quantity of the sec-
ond planned order (recomputed under LTC) also might be affected.
The preceding example illustrates a problem of coverage caused by an increase in
component-item gross requirements, but the same type of problem would have arisen if
the vendor of the open order for 15 had indicated that it was unable to ship on time. If
item Y were a fabricated part, the scrapping of 10 of the 15 in process would have the
same effect. In our example, the inventory planner was able to reduce the parent planned
order because lot sizing covered multiple periods’ net requirements. Had the planned
order covered a single period, it still could have been reduced by an amount within its
scrap allowance or other excess over the quantity of the net requirement. Safety stock at
the parent level also would allow a reduction in the planned order.
The type of problem illustrated in the preceding examples sometimes can be solved
without having to reduce the quantity of the parent planned order; instead, only its tim-
ing is changed. If the parent item’s planned lead time can be compressed (as it often can—
see discussion of lead-time flexibility in Chapters 7 and 12), the respective planned-order
release can be rescheduled for a later period and held in place as a firm planned order.
Rescheduling a parent planned-order release consequently (after the next explosion)
will reschedule the corresponding component gross requirement and thus solve the prob-
lem of net requirements coverage. In Figure 14-7, for example, if the lead time of parent
item X were reduced by one week (for purposes of the first planned-order release only),