Re: Minimum balance for children

Daniel, 

Good answer, but I believe the saying is "Don't forecast what you can 
calculate", The one other point I would make to pd is to be aware of 
inserting multiple variables to your MRP logic. By that I mean if you are 
planning requirements for end items (finished goods) in LOT QUANTITIES 
(Order Policy code H, I, J), you have already affected your inventory 
levels at replenishment to be greater than zero if your customers are not 
required to order full lot quantities. To add a minimum balance variable 
on top of that, you can further distort both the timing and the 
replenishment balances (Minimum balance of 1000, lot quantity of 2500, as 
soon as the projected balance is 999 or less, a planned order for 2500 
will be created by BPCS. If you have no further movement on this item 
before the replenishment order is received, you could conceivably have 
3499 in stock. Remember that you have over-planned all components to 
support that level of inventory, and the timing of their re-order. This 
could have a dramatic affect on cash flow and inventory cost/turns.) As 
another saying goes, "do all things in moderation". 

Frederick C. Davy, CPIM, PMP
Business Systems Analyst
Interface Solution, Inc.
Phone: (315) 592-8101
Fax: (315) 592-8481
e-mail: fcdavy@xxxxxxxxxxxx




"Daniel Warthold" <daniel.warthold@xxxxxxxxxxxx> 
Sent by: bpcs-l-bounces+fcdavy=sealinfo.com@xxxxxxxxxxxx
10/27/2005 09:56 AM
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Re: [BPCS-L] Minimum balance for children






Good answer Al.

I'd like to add, there is a principle in materials management that reads
"do not guess what you can calculate", (or something like that). This 
means
put the safety stock where you have uncertainty of the demand, (on the
finished item in this case), and let MRP calculate the requirements on the
components.

If you also had uncertainty on the components, like if they were also sold
as spare parts, then you might want to cover this uncertainty with
additionnal safety stocks on these components as  well.

Daniel Warthold P. eng CPIM



----- Original Message ----- 
From: "Al Mac" <macwheel99@xxxxxxxxxxx>
To: "SSA's BPCS ERP System" <bpcs-l@xxxxxxxxxxxx>
Sent: Thursday, October 27, 2005 5:13 AM
Subject: Re: [BPCS-L] Minimum balance for children


> Minimum balance on a parent does not cause any components to also have
> minimum balance.  All it causes is for MRP to tell you to make to fill 
the
> minimum balance, like it is a special kind of order.
>
> Fact that you have a minimum balance on the parent means the MRP tells 
you
> to make or order enough stuff to fill that minimum balance, plus any 
other
> requirements.  If you do as MRP says, you will end up with on-hand for 
the
> parent item equal to the minimum balance, and zero on all the children,
> because you met the requirements.
>
> We have minimum balance on end customer items where they can order from 
us
> with very short lead time.  So customer orders, we ship them out of the
> safety stock, then manufacture to replenish it.
>
> We have minimum balance on some raw materials that are in heavy demand.
>
> We have considered minimum balance for the output from factory
bottlenecks,
> and where high setup involved.
>
> >   Hi, Can anybody tell whether it is required to maintain Minimum
Balance
> > for children when it is maintained for End Item (Master Scheduled) ?
> > Because, child are already taken care through this topmost parent's 
min.
> > balance. regards, Prashanth
>
>
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