The basis of reorder point planning is the comparison of the available MRP stock
(total from plant stock and the fixed receipts) with the reorder point. If the available
stock is less than the reorder point, then procurement is triggered.
Reorder Point Planning
The reorder point should cover the expected average material requirements during
the replenishment lead time.
The safety stock should cover both excess material consumption during the
replenishment lead time and the additional consumption caused by delayed deliveries.
The safety stock is therefore part of the reorder point.
The reorder point is composed of the expected average material requirements during
the replenishment lead time and the safety stock. You must therefore consider the
following points when defining the reorder point:
• Safety stock
• Previous consumption or future requirements
• Replenishment lead time
During automatic reorder point planning, you determine the reorder point and the
safety stock in the material master. During automatic reorder point planning, the
integrated forecast program determines the reorder point and safety stock.
The reorder point is calculated as follows: reorder point = safety stock + daily
requirement * lead time.
Inventory management continuously monitors the plant stock during reorder point
planning. At each material withdrawal, the system checks whether the withdrawal
falls short of the reorder point. If this is the case, an entry is created in the planning
file for the next planning run. In the same way, the system checks whether the plant
stock still falls short of the reorder point during a material return. If so, a planning
flag is created so that the planning run can delete superfluous procurement proposals.
If return deliveries become superfluous as a result of fixed scheduled receipts, the
planning run proposes that these receipts are deleted. In this case, the MRP controller
must check with Purchasing whether the purchase order can be retracted.
The system calculates net requirements during the planning run.
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