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Author's profile photo Ramagiri Srinivas Rao

Demand driven Planning with MTO Production(Stg:50)


In massive coach manufacturing industry there are different type of finished products to be manufactured where BOM of each finished product consists of more than 2000 components which includes different types of assemblies and raw materials.

It is essential to plan the demand of finished material for year and requirement of raw material to meet the demand. Apart from this each finished product demand quantity will vary from customer to customer which requires proper tracking and cost accounting of all the assemblies manufactured specific to the customer.


Maintained strategy 50(Planning w/o Final Assembly) for the finished product with PIR and Manufacturing against the sales order is the solution for this requirement.

About strategy 50:

Strategy 50 is probably one of the most widely used strategies in a make-to-order environment. Like all make to order startegies, we can use stategy 50 if production is unique for each and every customer and raw material planning to be based on the finsihed product demand.

  1. Production quantities are planned effectively by using information from the Sales Information System, SOP, or other planning tools to
    plan production quantities.
  2. Prrocurement of the components is planned by means of PIR entered at the finished product level. The system creates special planned orders at the finished product level for these PIR’s. These orders are only relevant for production once a sales order for the finished product exists.
  3. PIR’s that are planned using this particular strategy are listed in a separate segment in the MRP list. The planned orders are created with the order type VP and are unconvertible. The sales orders for this strategy are entered as individual customer requirements and are maintained in a separate segment in the planning run
  4. Production Process(Final assembly/assemblies) is triggered once a sales order has been entered
  5. The incoming sales order consumes the planned independent requirements, and this in turn reduces the unconvertible planned order quantity.
  6. System creates a new convertible planned order for the sales order quantity.
  7. Planned independent requirement of the finished goods quantities that are left unconsumed increase the warehouse stock of the components and cause procurement to be decreased.


Master date to be maintained are listed below

  1. Startegy Group 50 for finished material
  2. Consumption parameters (Consumption mode, Bwd consumption, Fwd consumption) so that the independent requirements can be found.
  3. Item category group (for example, NORM) on the Sales Organization view.
  4. MRP Type PD in MRP 1 view
  5. Individual/coll.indicator 2 in MRP 4 View

Process Flow:

  1. Maintain Planned independent requirements
  2. Run MRP for generating Purchase Requsitions for Raw materials against the PIR
  3. Creation of Sales Order which intern reduces the PIR quantity
  4. Sales order based MRP, Production Planning and Execution.
  5. Delivery of sales order consumes the PIR quantity.


With strategy 50 we can maintain PIR and at the same time production can be driven as order based manufacturing. Required raw material planning will done based on the FERT PIR demand.

Refer the attachment for detail steps.

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      Author's profile photo Madhur Nigam
      Madhur Nigam

      Can you please check if document is missing from attachment?