Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

15.1.2 Loor — Load-Oriented Order Release

Intended learning outcomes: Produce an overview on the principle of the technique and the planning strategy. Describe the regulator analogy for load-oriented order release. Differentiate between time filter and load filter.

Load-oriented order release (Loor) [Wien95] has — for planning of limited capacity — high load as its primary objective. Further important objectives are low levels of work-in-process, short lead times in the flow of goods, and delivery reliability.

Principle of the technique: This heuristic technique is based on the funnel model (see also Section 13.2.1). Essentially, its aim is to adapt the load to the capacity actually available. It can be perceived as a generalization of the technique that we presented in Section 14.3.2, variation (c), because thanks to a clever heuristic the matching of load to capacity can be limited to one time period.

Planning strategy: Planning releases only those orders that can actually be handled by the work center without resulting in excessive queues. Processing of waiting work-in-process, and thus production control, proceeds according to the first in, first out (FIFO) principle.

Technique: Figure illustrates the technique using the analogy of the funnel model. Starting from the uppermost funnel containing all known orders, two filtering techniques are used to determine the orders to be released.

Fig.       Regulator analogy for load-oriented order release. (From: [Wien95]).

The time filter permits only those orders to flow into the urgent order book that fall within the time limit, that is, within the anticipation horizon.
The load filter releases only the amount of work that will maintain constant mean inventory, that is, the desired work on hand, for a work center.
The load limit is equal to the product of capacity during the anticipation horizon and the loading percentage.

Although instructions are available for determining the anticipation horizon and the loading percentage, in practice the values chosen are often based on experience or arbitrary.

Load-oriented order release is performed perhaps weekly for a specific planning horizon. It comprises the following steps (basically the same as those outlined in Figure

  • Determine the orders to be included in planning and rank them by priority. The candidates are, on the one hand, all orders that have already been begun: The order progress report shows the next operation waiting to be performed; all remaining operations are to be planned. On the one hand, the candidates are all orders that have not been begun, and for which the start date of the first operation lies within the time limit; Backward scheduling with standard lead times (see Section 13.3.3.) will determine the start date. All of these candidates are classed “urgent” and are ordered by start dates, whereby already begun orders are loaded first.
  • Handle and load operations in series order: The heuristic balances capacity for a single time period multiplied by the loading percentage against loads that will arise not only during this period, but also in later periods. This coarsening is the crucial idea. To this end, subsequent operations are not loaded with full work contents:
  • The conversion factor progressively converts the loads of subsequent operations.
    For example, if the conversion factor is 0.5 (= 1 / 200%), then the cumulative conversion factor for the first operation of an order is 1, for the second 0.5, for the third 0.25 (= 0.5 × 0.5), for the fourth 0.125 (= 0.5 × 0.5 × 0.5), and so forth. If, on the other hand, the first operation of the order has already been completed, the second op­eration is next. Thus, the cumulative conversion factor for the sec­ond operation is 1, for the third 0.5, for the fourth 0.25, and so on.
  • Use the exception rule: If one operation makes use of a work center whose load limit has already been exceeded (due to orders released earlier), unload the entire order, so that other orders are given priority.
  • Deal with all exceptions: After having loaded all orders, list those orders that were unloaded or set aside. This list contains the identifi­cation of the order in question, the workload (e.g., in hours), and the work center that caused the order decline. Check whether the following possible measures can be applied: First, advance the start date of the order. Second, if there is flexibility in the timing of the order due date, postpone it. Third, if there is at least a bit flexible capacity in case of elsewise full utilization, then deliberately increase the capacity. By re-performing all the steps for the orders set aside, the orders can possibly now be released.

Continuation in next subsection (15.1.2b).

Course section 15.1: Subsections and their intended learning outcomes

  • 15.1 Order Release

    Intended learning outcomes: Describe order proposals for production and procurement as well as order release. Explain load-oriented order release (Loor) and capacity-oriented materials management (Corma).

  • 15.1.1 Order Proposals, Order Release for Procurement and Production

    Intended learning outcomes: Describe the reasons for order proposals for production or procurement. Differentiate between the dealing of order proposals for C items and of other items. Explain purchase order release. Explain production order release and describe the availability test of resources.

  • 15.1.1b Production Order Release: Allocation, Staging, Accompanying Documents and Container Logistics

    Intended learning outcomes: Disclose issues linked with allocation and staging. Identify accompanying documents such as the traveling card and container logistics such as the two-bin inventory system.

  • 15.1.2 Loor — Load-Oriented Order Release

    Intended learning outcomes: Produce an overview on the principle of the technique and the planning strategy. Describe the regulator analogy for load-oriented order release. Differentiate between time filter and load filter.