CBP – Manual Reorder Point Planning
Overview on CBP:
CBP consumption based planning use hostorical data to calculate the future requirements with the help of material forecast or static planning procedures. Net requirements calculation is not triggered by an independent or a dependent requirement. In nutshell net requirements calculation is triggered when stock levels falls below a reorder point or by forecast requirements calculated from past consumption data.
MRP procedures supported in consumption based planning are:
- Reorder Point Planning
- Forecast-Based Planning
- Time-phased planning
This document we will discuss the usage of Manual Reorder Point Planning.
Reorder Point Planning:
In RPP once stocks falls below the reorder point then system will trigger the procurement proposal. There are two types of reorder point planning.
Manual Reorder Point Planning : In manual reorder point planning both the reorder level and the safety stock level manually maintained in 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.
Manual Reorder Based Planning:
Master Data for Raw Material to be Maintained: ( Material Master – MM01/MM02)
In MRP1 View, MRP Type as VB -Manual reorder point planning. Once VB is selected system will prompt to enter the reorder point. Based on the quantity entered in reorder point, if stock falls below the reorder point system will plan the procurement proposals during MRP run. For the given example reorder point maintained as 100.
Another important field is Lot size. What lot size system should plan incase stock falls below the reorder point. Generally recommended lot size for reorder point planning is to go with lot size HB -Replenish to maximum stock level. Once lot size is maintained as HB system will prompt to enter to Maximum stock level. For the given example Maximum lot size maintained as 400.
Stock Requirements List: (MD04)
As displayed below current stock for Raw Material SPICES is Zero. Ie; Available stock is less than reorder point. For the given example safety stock is not considered.
Material Requirements Planning (MRP) – MD03:
MRP execute for the material as given below.
Stock Requirements List After MRP Run (MD04):
Since stock is Zero which is less than the reorder point 100 so system generated purchase requsition upon MRP run. As lot size is HB with max lot as 400, so PR generated with 400 qty as displayed below.
PR converted to Purchase Order for Qty 10 and again executed MRP(MD03). Now PR generated for 390 Qty as shown below. Why?? System considers the available purchase orders and available stock during MRP. Considering the both if still stock is less than the reorder level, then PR will be generated for the max lot size qty – (Stock + purchase orders). Hence PR generated for (400 -(0+10)) = 390 qty as diplayed in below screen shot.
Raw Material SPICES is BOM item for FERT Material BEEFMORTADEL. Production order created for 500 qty for FERT BEEFMORTADEL as shown below. Now Question is Will the dependent requirement qty of 500 for Material SPICES will be considered by MRP?? Answer is NO. MRP will not consider the dependent requirement quantity for reorder point raw materials.
After Order creation again MRP(MD03) executed for material SPICES. As displayed below PR is for 390 qty only. Production Order adtional requirement qty is not considered by MRP.
Open PR converted to PO and further GR completed for both PO and stock updated to 400 as shown below.Now stock is more than the reorder point level. Executed MRP (MD03) for the material SPICES, but as discussed already MRP did not consider any dependend requirements and hence no addtional PR is generated as shown below.
200 quantity issued against the order
Another 200 qty issued against the order, now stock is Zero as displayed below.
If MRP is executed what is expected?? PR should be generated. Yes..As stock is less than the reorder point upon MRP run system generated PR for Max lot sixe 400 qty as displayed below.
Note: If MRP Type is maintained as VB with reorder point for FERT/HALB materials then during MRP run system also considers the respective production orders qty for the FERT/HALB material as available quantity. If purchase order exists for the material then that also is conisdered as available qty.
Eg: HALB 1 – Stock 0, Reoreder point 100, Max Lot size is 400, Production Order for 10 qty. Then PR Qty = 400 – (0+10) = 390 qty.
Thanks & Regards,