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Reorder Point Planning

Former Member
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Hi all,

I want to know the procedure for Reorder Point Planning,,,

thanks in advance,

regards,

urendra

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
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Hi

In reorder point planning, procurement is triggered when the sum of plant stock and firmed receipts falls below the reorder point.

The reorder point should cover the average material requirements expected during the replenishment lead time.

The safety stock exists to cover both excess material consumption within the replenishment lead time and any additional requirements that may occur due to delivery delays. Therefore, the safety stock is included in the reorder level.

The following values are important for defining the reorder point:

Safety stock

Average consumption

Replenishment lead time

The following values are important for defining the safety stock:

Past consumption values (historical data) or future requirements

Vendor/production delivery timelines

Service level to be achieved

Forecast error, that is, the deviation from the expected requirements

<b>Manual Reorder Point Planning</b>

In manual reorder point planning, you define both the reorder level and the safety stock level manually in the appropriate material master.

<b>Automatic Reorder Point Planning</b>

In automatic reorder point planning, both the reorder level and the safety stock level are determined by the integrated forecasting program.

The system uses past consumption data (historical data) to forecast future requirements. The system then uses these forecast values to calculate the reorder level and the safety stock level, taking the service level, which is specified by the MRP controller, and the material's replenishment lead time into account, and transfers them to the material master.

Since the forecast is carried out at regular intervals, the reorder level and the safety stock level are continually adapted to the current consumption and delivery situation. This means that a contribution is made towards keeping stock levels low.

Regards

Ramakrishna

Answers (2)

Answers (2)

Former Member
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<b>Process Flow</b>

The continuous monitoring of available warehouse stock within reorder point planning is carried out in Inventory Management.

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, the system makes an entry in the planning file for the next planning run.

If a material is returned to the warehouse, the system checks in exactly the same way 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 procurement 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 cooperation with Purchasing or Production must check whether the purchase order or the production order can be cancelled.

The system then calculates the net requirements. The system compares the available stock at plant level (including safety stock) plus the firmed receipts that have already been planned (purchase orders, production orders, firmed purchase requisitions and so on) with the reorder point. If the sum of the stock plus receipts is less than the reorder point, a material shortage exists.

The system then calculates the procurement quantity according to the lot-sizing procedure defined in the material master.

For reorder point planning, the system supports the Fixed lot size and Replenish up to maximum stock level lot-sizing procedures.

You can also use period or optimum lot-sizing procedures for reorder point materials. In this case, you must calculate future requirements using the forecasting functions. The forecast values are then interpreted as requirements.

The system then schedules the procurement proposal, that is, the system calculates the dates on which the purchase order has to be sent, or when production has to begin and the date on which the vendor has to deliver the goods or by which production has to have the goods ready.

TAJUDDIN

Former Member
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This message was moderated.

Former Member
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Hi Urendra,

In Material Master for e.g. Manual Reorder Point Planning pl give values as mentioned below:

MRP Type VB ROP 50 Lot Size e.g.Fixed Lot 100

When your stock falls below 50 Nos it will automatically create PR 100 Nos.

Regards,

Mani

Former Member
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Hi,

What about safety stock? will it taken into consideratin during reorder point planning,,,

I vl select manual reorder point planning -VB,reorder point=50,safety stock= 20, fixed lot size =40, now my available stock is 30, replenish lead time = 10days,,i understood that once avail stock fall below the reorder stock a planed file is created and once we do MRP then only an auto PR will be generated for 40 as we have gvn fixed lot size as 40, so finally my avail stock turns to 70 (30+40),,,

my question is without running any MRP , can an auto PR be generated once the stock has fallen below reorder point,,, and whether fixed lot size is mandatory for reorder point planning as my user is not sure about the fixed lot size (no fixed quantity),,,

regards,

urendra

Former Member
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Hi Dear

Reorder point planning is a procedure for MRP run then how can u think of having PR generation without MRP run using the safety stock and other parameters which are part of MRP run only.

Second thing you can make lot size non mandatory in material master.

Anjan