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About Reorder Point Planning MRP Reorder Point Planning

In the reorder point planning procedure, the system compares available warehouse stock at plant level with the reorder level. If stock falls below the reorder level, the system generates an order proposal. If, however, a purchase order or a production order covering the required quantity has already been planned by purchasing or production, then the system will not create another one.

The system calculates the quantity for the order proposal according to the lot-sizing procedure which you selected. There are several lot-sizing procedures from which you can choose. If you want, you can specify a different procedure for each material (see Lot-Sizing Procedures: Overview).

In addition, the order proposal is also scheduled; that means that the system calculates the date that the vendor or production must deliver the required quantity.

The continuous monitoring of available warehouse stock within reorder point planning is carried out via the inventory management program. Every time a material is withdrawn from the warehouse, the system checks whether this withdrawal has caused stock levels to fall below the reorder level. If this is the case, an entry is made in the planning file for the next planning run.

Exactly the same procedure is carried out if a material is returned to the warehouse; but this time, the system will check whether the available warehouse stock exceeds the reorder level again. If this is the case, an entry is made in the planning file which acts as an indicator for the planning run to delete any unnecessary order proposals.

If planned receipts are no longer required due to material returns, for example, then the system will suggest that these receipts should be cancelled. In this case, the MRP controller in co-operation with purchasing or production must check whether the purchase order or the production order can be cancelled.

In reorder point planning, an entry is only created in the planning file and the net requirements calculation is only carried out if stock levels fall below the reorder point. To avoid overplanning, sales orders, dependent requirements, reservations and so on are not usually included in the net requirements calculation as these future requirements are already planned with the reorder level. However, to guarantee that the MRP controller is informed of current issues, the system displays sales orders, dependent and manual reservations and so on.

In certain circumstances, however, it is necessary to include sales orders and/or manual reservations in the net requirements calculation for reorder point materials. Here, two further MRP types are provided in the standard system (an MRP type with manual reorder point planning and one with automatic reorder point planning). For these two MRP types you use the indicator Include external reqmts to indicate that sales orders and manual reservations in the replenishment lead time are to be included in planning. If you not only want these two requirement elements to be included in planning within the replenishment lead time, but over the total planning horizon, you must change the indicator Include external reqmts in Customizing for MRP to the appropriate MRP type. In release 4.0, it is possible to define which requirements, in addition to customer requirements and manual reservations, the system is to include in MRP. To define which requirements, select the appropriate fields in Customizing. You can choose from the following requirements:

  • Stock transfer requirements based on purchase requisitions, purchase orders and scheduling agreements for stock transfers
  • Dependent reservations based on production orders, maintenance orders and networks

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