Ordering Systems (2024)

Ordering systems are the "mechanical" part of inventory management. They're the programs that take our forecasts, actual orders, safety stock, and, and order quantities, and turn them into purchase orders or production orders. Due to their mechanical nature, there's not a lot of theory when it comes to ordering systems. But that doesn't mean there aren't things you need to know.

Though basic ordering systems are covered, the main point of the book is to cover more functional ordering systems such as time-phased order point, material requirements planning (MRP), and distribution requirements planning (DRP). In Inventory Management Explained you will learn:

• Basic ordering systems including Periodic Review, Fixed Order Point, Min-Max, and Multi-bin systems.
• Ordering systems that directly utilize your forecast.
• What Kanban really is.
• The real difference between Push Systems and Pull Systems.
• How to use a more advanced Periodic Review System for Fixed-Schedule Ordering.
• MRP & DRP:
  • What Materials Requirements Planning (MRP) is and why you would use it.
  • The difference between dependent and independent demand.
  • How MRP calculates Gross Requirements and Net Requirements.
  • What Planned Orders are, how they are created, and what you do with them.
  • The difference between single-level bills of materials and multi-level bills of materials.
  • How Master Production Scheduling (MPS) interfaces with MRP and your forecasts.
  • The difference between Regenerative MRP and Net Change MRP.
  • How Scrap Rates and Yield Rates (should) work within MRP.
  • What Phantom Bills, Planning Bills, Modular Bills, and Super Bills are.
  • What Distribution Requirements Planning (DRP) is and why you would use it.
  • How DRP works with MRP.
  • Why lot-sizing is different in a distribution network.
  • How to put together an effective Fair-Share Distribution system.

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