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Determination of Reorder Point & Safety Stock

Former Member
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Hi Experts,

When the MRP Type is set as "V2-Automatic Reorder Point w.ext.reqs." We have discovered whilst the forecasting is running, the system has calculated the safety stock higher than the re-order level. how could this be possible, or if the safety stock is a static figure?

I am under the impression the system will calculate both safety and re-order levels under mrp type v2, are their any other parameters we maybe missing?

Any information would be useful.

Regards,

JaganKK

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Answers (1)

Answers (1)

Former Member
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Hi,

Safety stock is a static figure in case of Manual ROP , whereas in case of Automatic ROP its not a static figure which adapts continually to the current consumption and delivery situation.

In Automatic ROP planning, system updates both the Safety Stock and the ROP.

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.

Logically , safety stock cannot be more than ROP since...........

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.

Edited by: sheik abdulla on Jun 27, 2008 5:24 PM