Page 303 - Orlicky's Material Requirements Planning

282 PART 3 Managing with the MRP System

FIGURE 15-7
Cable
S-bill for cable Assembly
assembly.

Wire Heat Strain
Length Connectors Shrink Relief

12 Type A Red
18 Type B Blue Yes
24 Type C Green No
36 Type D Yellow
Purple

In an assemble-to-order environment, typically manufactured and purchased parts
are common to many assemblies; each assembly is made up of a series of options. For this
reason, when promising orders using CTP, it is essential that reservations are made
against inventory that has been committed to a customer; otherwise, the same scarce sub-
assembly may be promised to two different customers (or more). In addition, CTP also
may take into account the capacity of the final assembly area when promising an order.
Even though all the parts may be available, if there is no capacity with which to assem-
ble them, the product will not be available when expected. The assemble-to-order com-
pany is well suited to the expectations of customers for mass customized products on
demand. The challenge is having the right building blocks available from which to make
the final product.

MAKE TO STOCK/ASSEMBLE TO ORDER

Some companies may be a combination of types and encompass a number of positions
on the volume/variety matrix. This company combines a number of different raw mate-
rials into significantly fewer semi-finished goods and then can explode those choices into
many finished products.
An example of this kind of company would be a computer manufacturer that also
assembles its own circuit boards and cables. Many individual parts need to be managed
and planned to support the assembly of significantly fewer semi-finished goods. From
these options, a wide variety of final products can be assembled. This company has all
the challenges of both the make-to-stock and assemble-to-order companies. This compa-
ny is driven from forecasts for semi-finished goods similar to the assemble-to-order com-
pany. The inventory strategy is to have these semi-finished goods available based on the
overall sales and operations plan by product mix. Then this type of company has to plan
and purchase the required raw materials to combine into subassemblies. These needed