Page 304 - Orlicky's Material Requirements Planning

CHAPTER 15 Industry Effect on MRP 283

raw materials are planned using traditional gross-to-net logic. This company has the
additional challenge of longer lead times because it must purchase all the separate com-
ponents, assemble them into semi-finished goods, and then assemble the finished prod-
uct to the customer’s orders.
The assemble-to-order company has to worry only about the timely response to cus-
tomer orders without the complication of ordering all the raw materials. The diversity of
manufacturing processes also can be a real challenge in this type of company. A make-to-
stock/assemble-to-order company can include processes as diverse as sheet-metal
stamping to electronic assembly to painting. This diversity of operations required for fab-
rication normally requires batch manufacturing that results in on-hand inventory as a
buffer between the fabrication and assembly operations because the assembly batches are
significantly smaller than the fabrication batches. The assembly resource capacity is the
buffer in this type of enterprise. Having a tight integration of design with fabrication is
essential for overall success. Using standard parts in multiple models helps to reduce the
complexity of the fabrication process and increases the volume of each individual part.
The cost per part is usually reduced as the volume increases. The design strategy is a crit-
ical success factor for this type of company.