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definition of safety stock, re-order point

definition of safety stock, re-order point, lot size and replenishment lead time. how they are calculated in consumption based planing related to MM?

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4 Answers

  • Best Answer
    Sep 18, 2008 at 08:45 AM

    hi,

    Safety stock is the stock which is used when there are delayed delieveries in your plant...

    So called safety stock...

    Its value you assign in MRP view of MMR...

    Reorder point is point till which you want to maintain stock level constantly in your warehouse....whenever the reorder point is greater than the Stock total....the procurement is hit and the system generates a PR, PO etc depending on the setting in the MRP...

    Lot size- it is total req. in numbers for which you want to hit the procurement....

    Replenishment lead time:Total time for the in-house production or for the external procurement of a product. In in-house production, the replenishment lead time is determined to cover all BOM levels.

    Regards

    Priyanka.P

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  • Sep 18, 2008 at 09:01 AM

    > safety stock

    The purpose of the safety stock is to prevent a material shortage from occurring. In order to determine the safety stock level, you must first specify the risk of a material shortage and also the desired service level.

    http://www.sap-basis-abap.com/mm/what-is-safety-stock.htm

    > re-order point

    The requirements calculation only calculates replenishment requirements when the current stock falls below the reorder point. (In Other words its a Calculation procedure)

    > lot size

    Lot-sizing procedures serve to calculate the procurement quantities, that is, the purchase order and production quantities.

    You define lot-sizing procedures in Customizing for MRP in the IMG activity Check lot-sizing procedure.

    You assign the required lot-sizing procedure to the material in the Lot size field in the material master (MRP 1 view).

    > replenishment lead time

    Total time for the in-house production or for the external procurement of a product. In in-house production, the replenishment lead time is determined to cover all BOM levels.

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    Former Member
    Sep 18, 2008 at 08:43 AM

    Hi,

    Safety stock

    The quantity of stock to satisfy high requirements in the stocking-up period.

    The purpose of the safety stock is to prevent material shortage. To determine the safety stock level, you must specify the risk of a material shortage and the desired service level.

    Safety stock is not used in production

    Lot size (materials planning)

    Key that determines which lot-sizing procedure the system uses within materials planning to calculate the quantity to be procured or produced.

    Reorder Point

    If the stock falls below this quantity, the system flags the material for requirements planning

    Regards

    Merwyn

    .

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  • Sep 18, 2008 at 09:11 AM

    Hi,

    Refer this link for the process for re-order point planning

    http://help.sap.com/saphelp_47x200/helpdata/en/f4/7d256344af11d182b40000e829fbfe/frameset.htm

    Reorder Point

    If the stock falls below this quantity, the system flags the material for requirements planning by creating a planning file entry.

    With manual reorder point planning, you enter the reorder point manually. With automatic reorder point planning, the system determines the reorder point automatically for forecasting purposes.

    If you are creating a material master record, you must always enter the reorder point manually, even if it is later overwritten by the system. This makes it possible to plan material requirements, even before

    forecasting.

    Minimum lot size

    Minimum procurement quantity

    Maximum lot size

    Quantity that is not allowed to be exceeded during procurement.

    Safety stock

    Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period.

    The risk of shortfalls is reduced by having a safety stock.

    With manual reorder point planning, you can enter a value in the material master record. However, it is merely for information.

    With automatic reorder point planning and forecast-based planning, the system determines and adjusts the value automatically for forecasting purposes.

    Minimum Safety Stock

    The quantity that defines the lower limit for safety stock. This value

    cannot be exceeded.

    Lot size (materials planning)

    Key that determines which lot-sizing procedure the system uses within materials planning to calculate the quantity to be procured or produced.

    Thanks & Regards,

    Kiran

    Edited by: Kiran. V on Sep 18, 2008 11:11 AM

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