Q. Why doesn't MRP use Alternate Parts in its Calculations?
A. Alternate Parts are components that can be used to replace existing parts if needed, they are not the preference. Alternate parts are assigned in the AVL and Reference Designator tab within the BOM module and they are assigned to specific parts on the BOM. Each part on the BOM can have one or more alternate parts. Frequently, this is because the alternates (although acceptable) are more expensive. This information is provided in the event that the user CANNOT find the required parts for the kit and/or the MRP order actions are too far out to meet requirements. This information provides guidance on which parts the user may substitute in the kit, by creating a manual kit shortage for the alternate part, then checking (in the kit screen) that the original part is not needed, so it will come off the shortage list which drives MRP. When the alternate part is added to the kit, the MRP will look for those parts as well, and create order actions if necessary. This also will give Manufacturers visibility of the parts so they can be used in production if needed, but will only use the parts if the original is not available.
This part needs verification - IF the user has setup customer AVL's for the selected alternate part in the Item Master, and IF the work order is for that customer, then the customer AVL will be honored in kitting. Otherwise, the standard AVL at the internal part level will be used.
If the MRP factored in alternates and you had stock on the more expensive component, MRP would not give the action message to buy the original. This could easily lead to an unnecessary increase in the cost to build the assembly.
For example:
Given
1. Part A (the original) is used 10 times on a BoM and had a standard cost of $0.25.
2. Part B had a standard cost of $0.35, and can be used as needed.
3. If total demand for Part A is 2000 and you have 0 on hand, but you have 2500 of part B on hand.
MRP would try to use part B instead. You would now have spent an extra $200 on placing that part (a 40% increase). On the other hand, if MRP does not consider the alternates, the buyer would try to order 2000 of part A. If they can only get 1800, they can fill in the missing pieces (in kitting) with part B and only increase the total spent on the job by $20 (a 4% increase).
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