MRP Reorder Point calculation

[Former Member]

Iam going for Reorder Point Planning

Per day consumption is 100 Nos

MRP Running is once in 7 days

How do i fix the Reorder Point, Fixed lot size, so that inventory will be controlled

is there any formula available for this..

if i fix roughly my inventory is increasing say fixed lot size 1000

[Former Member]

Hi,

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

Regards,

nandha