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VM - Reorder Point Calculation

Dear All ,

I've read almost all the postings in sdn and sap help, but not able to calculate the reorder point like SAP did.

Below the inputs are listed;

Forecast model: G - Moving average

Period indicator: M

Hist. Periods: 3

Forecast Periods: 3

Safety stock: 0

Planned delivery time: 0

Service Level: 0

In customizing, purchasing delivery time is 1

Consumption values;

Period Corrected Value

03.2013 60

02.2013 80

01.2013 120

After i run forecast, forecast values for the next 3 month are calculated as 86,667 which is ok for me. MAD is 21,333 and Reorder Point is 4,044.

I'm unable to understand how the MAD and ROP is calculated.

Can u please explain how they are calculated according to my example ?

Please dont send me the related sdn or sap help links as i've already gone through all of them .

Thanks in advance..

Kind Regards,

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1 Answer

  • Best Answer
    Posted on Mar 06, 2013 at 07:42 AM

    PDT is in calendar days and we need to convert them into Working days while calculating the Safety stock which again corresponds to working days.

    SAP standard: (Default values used according to the Forecast period for the material).
    Calendar days = 0.7143 (5 Working days per week/7)
    Week = 5
    Month = 21.4286 (5 working days per week/7 * 30)

    1.Safety stock = R * Sqrt (PDT/21.4286) * MAD

    In your case R is 0 (as Service level is zero) and hence Safety stock will be zero
    PDT will be interpreted as 1 though in your case.

    Maintain service level between 50 -99.8% and record your observations.

    2. ROP = Lead time * Basic value or Forecast in days + Safety stock
    =1 * (86.667/21.4286) + 0
    = 4.044

    Hope things are clear for you now.

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