Page 294 - Orlicky's Material Requirements Planning

C HAP TE R 15

Industry Effect on MRP

To better understand the competitive position of an enterprise, the relationship
between the volumes produced by the company and the variety produced is compared.
An interesting diagonal has evolved where most companies are clustered in order to
compete effectively. This position on the diagonal is the optimal position in terms of pro-
duction cost and responsiveness. Movements from that competitive diagonal can be
either a competitive advantage for the company or a disaster. According to Wheelwright
and Hayes, this can be represented in the produce/process matrix shown in Figure 15-1.
This figure shows an inverse relationship between variety and volume. In general,
as the product volume increases, the variety tends to decrease. Attempting to compete off
this diagonal is not sustainable.

PROJECT MANUFACTURING COMPANY

The far upper-left corner of the volume/variety matrix is a company that produces a very
high variety of products but in very low volume. This can mean that a single product
may be developed, planned, and produced once and never produced again. These prod-
ucts or deliverables typically are managed as unique projects. A project-driven company
competes in the market based on the wide variety of products that it can produce using
the same resources. This type of company uses some material requirements planning
(MRP) for determining what needs to be ordered and when. In addition, this organiza-
tion normally will use a project management system to determine the critical path for the
activities of the project. The tools of the project management company also include a pro-
gram-evaluation review technique (PERT) and Gantt charts. These tools can provide the
expected finish date once the start date is determined using forward scheduling. For each
task in the scheduling network, by using forward scheduling, the earliest a task can start
is calculated. Or, given a desired completion date, the suggested start date can be calcu-

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