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Production Planning and Control

The time-phased order point (TPOP) is used for the planning and control of independent demand that is not continuous. In some situations, such as Master Scheduling and Distributions Resource Planning, TPOP will be used when demand is continuous. It often will be used for finished goods’ and service parts’ control. The term “order point” is a misnomer in that this technique does not calculate a specific order point. Time phasing is the segmenting of inventory status by time periods. The technique uses the standard MRP (Material requirement planning) logic of determining net requirements by time period.

The demand in a TPOP system may be forecasted or based on customer orders and is listed as the Gross Requirement. Gross requirements are listed by time period over the horizon of the planning period. The Available Inventory is also listed by time period with the projection based on forecasted demands (gross requirements), as well as open and planned order receipts. The Net Requirement for the period is calculated by subtracting the projecting available inventory from the gross requirement. The order quantity may be based on a fixed period, such as every 2 weeks, or a fixed quantity.

Gross requirements are entries from the MPS representing the total quantity needed for a product in each time bucket of the planning horizon. Net requirement is an indication of whether the projected inventory (available) can or cannot cover the gross requirement. If the projected inventory exceeds the gross requirement then no net requirement is needed. If the projected inventory (available) is less than the gross requirement then there is shortage and the net requirements indicates the number that is short which has to be replenished.

In conclusion, gross requirement is the time-phased sum of independent and dependent demand of the respective period. While net requirements on the other hand, are the time-phased negative projected available inventory.

References:

Onwubolu, G. C. (2002). Emerging Optimization Techniques in Production Planning and Control. Covent Garden, London: Imperial College Press. Schonsleben, P. (2004). Integral Logistics Management: Planning & Control of Comprehensive Supply Chains. New York: CRC Press. Toomey, J. W. (2000). Inventory Management: Principles, Concepts and Techniques. New York: Springer.