Establishing Vendor Lead Times and Product Build Times
When you begin the IRP generation process, the system calculates the action date for each recommendation on the Inventory Requirements Planning Report by taking into account the vendor lead times and product build times. The primary vendor's lead time is defined in Item Vendors Maintenance.
For items that have a procurement type of "Make," establish a fictitious vendor name in Accounts Payable that can be selected at the Primary Vendor field in Item Maintenance. And then enter the build time for that item at the Lead Time field in Item Vendors Maintenance. If no lead time is entered for an item, the values entered in the Default Lead Time (Days) field and Default Build Time (Days) field in Inventory Requirements Planning are used.
When inventory level adjustments are recommended, the IRP generation process will use the lead time for the item plus the IRP accounting date to determine the new required date for the inventory level adjustment. The action date will be determined by the new required date less the lead or build time.
Build time is the number of days required to build a product from its components.
If Default Build Time is selected at the Calculate Build Time for Make Items Using field in Inventory Requirements Planning Options, the system uses the following hierarchy to determine the action date for scheduling "Make" items:
- The item vendor lead time is used.
- If the item vendor lead time is 0 (zero), the entry at the Default Build Time (Days) field in Inventory Requirements Planning is used.
If Work Ticket Template is selected at the Calculate Build Time for Make Items Using field in Inventory Requirements Planning Options, the system uses the following hierarchy to determine the action date for scheduling "Make" items:
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The template is used to determine build time.
The required date for each item on a bill of material will be equal to the start date of the step to which the item is assigned. It is recommended to assign a default lead time for "Make" items. The required date minus the lead time equals the action date.
- If there is no template, the item vendor lead time is used.
- If the item vendor lead time is 0 (zero), the entry at the Default Build Time (Days) field in Inventory Requirements Planning is used. If this is an item to buy, the entry at the Default Lead Time (Days) field in Inventory Requirements Planning is used.
The following is an example of how the system establishes vendor lead times and product build times for a computer with a three-level bill of material:
- Assemble motherboard from five components.
- Assemble case from box, power supply, diskette drives, and motherboard.
- Assemble final computer from case, video display, keyboard, etc.
If the vendor lead time in the Inventory record for this item is 0, entering 1 at the Default Build Time (Days) field in Inventory Requirements Planning means that the computer will take 3 days to build (since there are 3 bills and each bill requires 1 day of build time). In this example, the lead time is assumed to be blank or 0 (zero) in the Inventory record for this item and the default build time is substituted for the 0.
Note: If Work Ticket Template is selected at the Calculate Build Time for Make Items Using field in Inventory Requirements Planning Options and the IRP Generation process encounters a bill of material that does not contain a work ticket template or the template is invalid, the lead time from the vendor will be used. If this value is 0, the value entered at the Default Build Time (Days) field in Inventory Requirements Planning will be used.
For more information, see the IRP Generation Process.