Page 463 - Orlicky's Material Requirements Planning

CHAPTER 26 Demand-Driven Planning 441

quantity factors. Only a portion of actual demand at any one time will be involved in the
available stock equation rather than the total demand. Typically, for stocked positions,
Actual demand sales/customer orders due today
any past-due sales/customer orders qualified spikes

Qualified Order Spikes

Demand forecast consumption rules are some of the most complex areas to understand
in even the most rudimentary MRP system. Complexity stems from how to handle the
actual overage or underconsumption against the forecasted quantities. When MRP was
planned in weekly time buckets, this was a bit easier because the week time bucket
smoothed some of this volatility. However, now with MRP daily or in real time, the fore-
cast error can be almost impossible to identify and respond to in a timely fashion.
A qualified spike is a quantity of cumulative demand (usually in a daily bucket) that
represents a threat to the integrity of the buffer and is within a critical timing window. In
order to define a threatening quantity, the order spike threshold must be determined. An
order spike threshold (OST) is managed globally through the buffer profiles and is
expressed as a percentage of the red zone. Revisiting the three example parts from
Chapter 24 (403P, 707, and 501D), assume that the buffer profile to which each part is
assigned has an OST set to 50 percent of the red zone. In Figures 26-6, 26-7, and 26-8 you
will see each part’s OST calculation and position in relation to the entire buffer.
An OST is set for all stocked items. For replenished and replenished override parts,
it is typically set at 50 percent of the red zone. For min-max parts, it is a percentage of the
minimum. In each case, a daily cumulative amount of actual demand equal to or above
the OST will be qualified as a spike. This is then added into the available stock equation.
In order to qualify as a spike, the cumulative amount must trip the threshold and occur
within the critical timing window. The critical timing window is the order spike horizon.
The order spike horizon is set to a realistic reaction time. In most cases, the order spike
horizon is set at a minimum of one ASRLT for each buffered part.

FIGURE 26-6
Order spike threshold setting for Part 403P.
OST
Part: 403P Buffer 233 590 890
Lead Time: Profile: !
21 Days B11MOQ
Red Zone Base 179 403P
Red Zone Safety 54
OST % 50% 0% 20% 40% 60% 80% 100%
OST Level 117