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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.

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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.

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Material Requirements Planning (MRP) – MD03:

MRP execute for the material as given below.

VB2.png

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.

VB3.png

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.

VB4.png

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.

VB5.png

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.

VB6.png

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.

VB7.png

200 quantity issued against the order

VB8.png

Another 200 qty issued against the order, now stock is Zero as displayed below.

VB9.png

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.

VB10.png

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,

Ramagiri

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15 Comments

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  1. Sethu A

    Thank you very much for the document.

    If you happen to get some time, could you please explain the parameters in Forecasting view (MM01)? For example, what exactly happens during initialization period? Procedure regarding how to execute forecast based planning is available, but to my knowledge, not much information is available to understand the parameters in forecasting view.

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        1. Ramagiri Srinivas Rao Post author

          Hi Ozgur Unal,

          Thanks for your feedback. I will include about ‘separately planned storage location and replenishment time’ at the earliest.

          Thanks & Regards,

          Ramagiri

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            1. Jiaul Haque

              Automatic ROP-

              Main difference is MRP Type -VM .You can also use V1 or V2 if you want external requirement to be considered during planning .

              Rest of the setup will be same as like Consumption Base Planning -Manual ROP. MRP Type VM has been marked as Automatic ROP calculation based on Forecasting View of the Material Master setup .

              You have to  maintain the Forecasting View with Total Planned consumption data based on (Check OMJJ set up with Consumption update -G)   and then execute Forceast Individually or Collectively .

              Please refer my earlier posting : Forecast based planning

              Automatic Reorder Point Planning

              Steps :

              1.Maintain Forecasting View  for all the items

              2.Execute Forceast in MP38

              3.Transfer Demand through MD70 to planning table -MD62

              4.Check the demand in MD04

              5.Run MDP-MD03/MD01 based on requirement .

              6.Check the Material master -MRP2 view for Safety Stock and MRP1 view as ROP . Do not keep any ROP or Safety Stock in MMR before you execute the forecast .

              Hope this helps

              Regards

              JH

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            2. Ramagiri Srinivas Rao Post author

              Hi Krishnendu,

              Rightnow i dont have the document will share at the earliest. Basically you need to maintain the MRP type as VM, maintain forecasting view with consumption details and execute forecast in MP30 or MP38. System will update the reorder level in MRP views.

              Jiaul clearly explained with related links. Have a look.

              Thanks & Regards,

              Ramagiri

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  2. Patrick Buscio

    Is it possible to use reorder point planning and take dependent requirements into consideration? We are trying to set up some parts with max stock and reorder point levels but when I test using the described parameters I lose all of the demand we had for the material

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    1. Jiaul Haque

      Hi

      ROP  = SS + Req Qty  .Again ROP can be equal to Maximum Stock Level  with Lot size HB .Now , ROP can  be done both at Header Level as well as Dependent Requirement level with MRP type VB , VM .If you are talking about ROP at Dependent Requirement Level , then various planning situation  can rise based on stock , requirement , MMR setup  for ROP etc . Let say Dep.Requirement Item ,M1  is for M2 ( Header )  .

      M1 has ROP 100 in MMR

      M1 has Dep.Req 110

      M1 has unrestricted stock 20

      If you have ROP  and run MRP either MD02 at M2 level or MD03 at M1 level , then Net PR will be  90 .

      So you have analyses those as per your requirement

      Regards

      JH

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  3. Lakshminarasimhan BS

    Hi Ramagiri,

    Thank you for this post. It is helpful. I would want to know how Safety Stock Level is used. I am particularly interested to know what will happen in the MRP run when the On Hand Stock (this stock does not include purchase orders) goes below Safety Stock Level? Will MRP create a new PR to exclusively to refill upto to the Safety Stock Level?

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