Reorder Point Planning

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

Features
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

Manual Reorder Point Planning

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

Reorder Point Planning

Procedure
Prerequisites
You have set an MRP type for reorder point planning in the material master
(MRP 1 view).

You define MRP types in Customizing for MRP in the

IMG activity Check MRP types.
In the material master, you have entered or let the system
automatically calculate and enter the values for the reorder point
(MRP 1 view) and for the safety stock (MRP 2 view).

Process Flow
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Every time a material is withdrawn from the warehouse, the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 (see also
Checking the Planning File).
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.

MDBT Carry out total planning in background mode

ZPM025 Consult open order