Operations and Supply Chain Management The Core

274 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
exhibit 9.8
The Inventory Status Record for an Item in Inventory
Part no. Description Lead time Std. cost Safety stock
Item master
data segment
Order quantity Setup Cycle Last year's usage Class
Scrap allowance Cutting data Pointers Etc.
Inventory
status
segment
SUBSIDIARY
DATA
Allocated
Gross
requirements
Scheduled
receipts
Projected
available balance
Planned order
releases
Order details
Pending action
Counters
Keeping track
Control
balance
Period
1 2 3 4 5 6 7 8
Totals
when it is desirable to identify the parent item that caused the material requirement. For
example, we may want to know what subassemblies are generating the requirement for a
part that we order from a supplier. The MRP program allows the creation of a peg record
file either separately or as part of the inventory record file. Pegging requirements allows
us to retrace a material requirement upward in the product structure through each level,
identifying each parent item that created the demand.
Inventory Transactions File The inventory status file is kept up to date by posting inventory
transactions as they occur. These changes occur because of stock receipts and disbursements,
scrap losses, wrong parts, canceled orders, and so forth.
The MRP Computer Program
The material requirements planning program operates using information from the inventory
records, the master schedule, and the bill-of-materials. The process of calculating
the exact requirements for each item managed by the system is often referred to as the
“explosion” process. Working from the top level downward in the bill-of-materials,
requirements from parent items are used to calculate the requirements for component
items. Consideration is taken of current on-hand balances and orders that are scheduled for
receipt in the future.
The following is a general description of the MRP explosion process:
1. The requirements for level 0 items, typically referred to as “end items,” are retrieved
from the master schedule. These requirements are referred to as “gross requirements”
by the MRP program. Typically, the gross requirements are scheduled in
weekly time buckets.