Page 439 - Orlicky's Material Requirements Planning

CHAPTER 24 Buffer Profiles and Level Determination 417

Buffer Level Examples

To help illustrate the application of buffer level determination, three examples are pre-
sented: one purchased, one manufactured, and one distributed.

First Example: Purchased Part 403P Part 403P will follow the buffer profile
B11MOQ. The purchasing lead time for this part is 21 days. The ADU is 17. The MOQ is
300. The MOQ represents 84 percent of usage over lead time. This is a medium-lead-time
category part, so the MOQ is significant. The MOQ of 300 will be the green zone. The yel-
low zone will be an entire lead time’s usage (17 units/day 21 days 357 units). The
red zone will be calculated by combining the red zone base and safety factors. For red
zone base 403P is in the medium-lead-time category (41 to 60 percent usage over lead
time). In this particular case, we will use 50 percent (once again, this is determined by the
planners for the specific environment). Red zone base will be 179 (357 0.5 178.5). For
red zone safety, 403P is in the low variability category (20 to 40 percent of red zone base).
In this particular case we will use 30 percent. Red zone safety will be 54 (179 0.3
107.1). The top limit of the buffer (top of green) will be 890 units, top of yellow will be
590, and top of red is 233. Figure 24-14 presents the buffer summary.

Second Example: Manufactured Part 707 Part 707 will follow the buffer profile
M21. The ASRLT for this item is 13 days. The ADU is 6. There are no ordering policies for
the item. Part 707 is a medium-lead-time part. This will define both the green zone and
red zone base at a range of 41 to 60 percent usage over lead time. In this environment, the
planners chose to set this at 45 percent. The green zone for Part 707 will be 35 (78 0.45
35.1). Red zone base also will be 35. Yellow zone will be set to usage over one full lead
time: 78. For red zone safety, Part 707 is in the medium variability category (41 to 60 per-
cent of red zone base). Planners have set this at 50 percent. Red zone safety will be 18 (35
0.5). The top of green will be 166 units, top of yellow is 131, and top of red is 53. Figure
24-15 presents the buffer summary.

FIGURE 24-14

Part 403P buffer summary.

Part: 403P Buffer 233 590 890
Lead Time: 21 Profile:
Days B11MOQ
403P
Green Zone 300 R Y G
Yellow Zone 357
Red Zone Base 179 0% 20% 40% 60% 80% 100%
Red Zone Safety 54