Page 41 - Orlicky's Material Requirements Planning

22 PART 1 Perspective

In the preceding illustration, there is a resource (“Buffered Resource”) that has an
additional amount of capacity (“Capacity Buffer”) in order to absorb surges in demand
and variability passed on by previous resources (“Preceding Sequence of Events”). These
surges are represented by the bars. In this case, the resource had more than enough capac-
ity to absorb the surges, ensuring a reliable and stable output (“Stable Output”). The
capacity buffer can be determined by analyzing the typical number of demand surges
and variability within the preceding set of resources.
The APICS Dictionary (New York: Blackstone, 2008, p. 17) defines these capacity
buffers as follows:
capacity cushion: extra capacity that is added to a system after capacity for expect-
ed demand is calculated. Syn: safety capacity. See: protective capacity.
protective capacity: The resource capacity needed to protect system throughput—
ensuring that some capacity above the capacity required to exploit the constraint is
available to catch up when disruptions inevitably occur. Nonconstraint resources need
protective capacity to rebuild the bank in front of the constraint or capacity-constrained
resource (CCR) and/or on the shipping dock before throughput is lost and to empty
the space buffer when it fills.
surge capacity: The ability to meet sudden, unexpected increases in demand by
expanding production with existing personnel and equipment.

Stock Buffers
Stock buffers are quantities of inventory or stock that are designed to decouple demand from
supply. They are commonly amounts of inventory that will provide reliable availability of the
stock to consumers while at the same time allowing for the aggregation of demand orders,
creating a more stable and efficient supply signal. Below are the typical and prevalent types
of stock buffers used in manufacturing today and recognized by most ERP systems.
min-max system: A type of order point replenishment system where the “min” (mini-
mum) is the order point and the “max” (maximum) is the “order up to” inventory level.
The order quantity is variable and is the result of the max minus available and on-order
inventory. An order is recommended when the sum of the available and on-order inven-
tory is at or below the min.
safety stock: In general, a quantity of stock planned to be in inventory to protect against
fluctuations in demand or supply [APICS Dictionary (New York: Blackstone, 2008)].
supermarket: Stores of in-process inventory used where the process cannot produce
a continuous flow. Examples of supermarkets include when one operation services
many value streams, when suppliers are too far away, or when processes are unsta-
ble, have long lead times, or have out-of-balance cycle times. The supplying operation
controls the supermarket and its inventory. Supermarket inventory is tightly controlled. 5

5 Natalie J. Sayer and Bruce Williams, Lean for Dummies, Hoboken, NJ: Wiley, 2007, p. 108.