Page 400 - Orlicky's Material Requirements Planning

CHAPTER 21 Historical Context 379

eration. However, the computer power at the time was limited, and even if the capacity
algorithms were available, it was just not possible to calculate both at the time.
Remember that the first MRP packaged systems were written in only 8 kB of memory!
This evolution continued with the improvement of technology that enabled the planning
of capacity sequentially to the material plan, and a closed-loop MRP process was possi-
ble in 1972. However, computers quickly became more powerful, and closed-loop MRP
developed to answer the problems of the day. Closed-loop MRP is defined as:

A system built around material requirements planning that includes the additional plan-
ning processes of production planning (sales and operations planning), master pro-
duction scheduling, and capacity requirements planning. Once this planning phase is
complete and the plans have been accepted as realistic and attainable, the execution
processes come into play. These processes include the manufacturing control
processes of input-output (capacity) measurement, detailed scheduling and dispatch-
ing, as well as anticipated delay reports from both the plant and suppliers, supplier
scheduling, and so on. The term closed loop implies not only that each of these
processes is included in the overall system but also that feedback is provided by the
execution processes so that the planning can be kept valid at all times. 3
Closed-loop MRP was the next evolution and allowed the planning of both mater-
ial and capacity. Still, the development and implementation of an MRP system were far
from a guarantee of success. The tool was far more sophisticated. The availability of
APICS education provided the necessary people who understood how the tools worked,
but still the implementation was not a guarantee of success. Technology became more
powerful, and the client-server age was on us. In the 1980s, MRP II (manufacturing
resource planning) was developed to provide further integration to the core business
system by incorporating the financial analysis and accounting functions. MRP II is
defined as:
A method for the effective planning of all resources of a manufacturing company.
Ideally, it addresses operational planning in units, financial planning in dollars, and has
a simulation capability to answer what-if questions. It is made up of a variety of
processes, each linked together: business planning, production planning (sales and
operations planning), master production scheduling, material requirements planning,
capacity requirements planning, and the execution support systems for capacity and
material. Output from these systems is integrated with financial reports such as the
business plan, purchase commitment report, shipping budget, and inventory projec-
tions in dollars. Manufacturing resource planning is a direct outgrowth and extension
of closed-loop MRP. 4

3 APICS Dictionary, 12th ed. New York: Blackstone, 2008, p. 21
4 APICS Dictionary, 12th ed. New York: Blackstone, 2008, p. 78.