Consumption Based Planning


MRP:        It guarantees the material availability

- for manufacturing (Internal requirements) and

- for Sales & Distribution for external requirement)

MPS:      Master production schedules are

- The main assemblies or end prod which are planned for extra care.

- These MPS items are contributed to higher inventory

- If there is a change in MPS item the whole MRP changes

- A frequent change to MPS de-establishes the MRP


- Procurements are triggered based on the past consumption parameters or fore cast planning

- When stock value falls below certain limit, based on the forecast values your procurement triggers

- Based on the past consumption values you are planning your future procurement requirements

In CBP there are 3 procedures:

1. Re-order Point planning

2. Forecast based planning

3. Time phased planning

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 Re-order Point planning


- When stock level falls below the ROP, system suggest for procurement

- RLT = Purchase process time + Planned time + Gr processing Time

- Based on the past consumption data you can define ROP and safety stock

- During the period of RLT excess consumption or excess demand is met by the SAFETY stock


- When using the CBP your Inventory management should be current and active.

- Your consumption pattern must be constant or consistent

- For CBP

i. Maintain MRP1, MRP2 and forecast views

ii. Define ROP and safety stock in Material master data

- At ROP procurement triggers

- Procurement Quantities are in LOTs

- Quantity triggered for procurement is net requirement

- Generally Maximum stock is not defined only ROP is defined

Lot Size Procedure:

When net requirements are triggered those are converted into lots For this Lot sizing procedures are defined

1. Static Lot Sizing Procedure

2. Periodic Lot sizing Procedure

3. Optimum lot sizing procedure

1. Static Lot Sizing Procedure:

Again these are 4 procedures

a) Fixed LOT : In MRP you have to mention the LOT size

b) LOT for LOT : Based on Order Quantity LOT size is created

c) Replenishment to maximum stock level: this is only one lot you have to define the maximum stock level

d) Fixed LOT with splitting and over lapping: you can allow the splitting and the over lapping of LOTs

2. Periodic Lot sizing Procedure

Here you can have

- Daily – Daily requirements per a day form a LOT

- Weekly – all requirements generates over a period

- Monthly - all requirements generates over a period

- Periods of flexible length equal to posting periods

- Freely definable periods as per planning calendar

- All lot sizes are allowed for splitting and over lapping

Based on the period all requirements generated over a period

3. Optimum lot sizing procedure

a) Part period balancing

b) Least Unit Cost method

c) Dynamic Lot creation

d) Groff Reorder point planning

[Costs: Storage Costs (For storing the inventory)

Setup costs: Procurement Cost]

a) Part period balancing

Here the storage costs are equal, set up costs till the time

requirements are gathered and formed as LOT

                                            (Requirement x Price x Storage cost% x  time in storage)

Average Cost =                               -------------------------------------

100 X 365

Requirement = Total Material requirement

Price = Material Price

Storage cost= 10 % of Base cost (Material cost) generally

Considered in SAP

Time in storage = in days

b) Least Unit Cost method

Storage costs should be greater than the setup costs

The same formula for storage cost can be used here.

c) Dynamic Lot creation

The Storage cost + Proc. Cost should cover to create a LOT.

The sum of the Storage cost + Proc. Cost should be the


d) Groff Reorder point planning

a. You are expecting a saving.

b. The formula is

                                              (Requirement x Price x Storage cost% x   time in storage)

Average Cost =                                     -------------------------------------

2 x100 x 365

Here from storage and procurement 100% savings are expected

 Forecast based planning

- Based on the past consumption values, the requirements are fore cast for the future.

- In the FBP when you plot a graph with a past consumption date, you can find certain pattern in consumption

- When you plot a graph of consumption over a period of time, SAP assumes the consumption pattern on one of the below models

Constant Model


Trend Model

Some times you can see an increasing trend of consumption over a period of time due to the increase in the business.

This is called Trend Model


Seasonal Model

Consumptions are high only for a particular period


Trend seasonal model

In this model Business seasonal consumption seasonally increases. This is called a Trend Seasonal model


 Time phased planning

- This is used very rarely used

- May be used in advance countries


Planning Cycle: Vendor supplies material in this period

Delivery cycle: Company receives the material in this period

From Tues day to Friday

i. Vendor waits for receipts for GR

ii. Goods at plant and wait for GR

iii. If receipt is not done on Friday, then it has to be done in the next Friday.

iv. You have to plan the material accordingly.

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MRP Master Data

MRP controller

He is a planner in the production department

A Group or individual person responsible for easy planning

We can create MRP controller as a 3 Digit alphanumeric code

MRP Group

You group deferent material and you plan as a group for easy planning


Grouping certain material for easy planning

PPC calendar

- Production Planning and Control Calendar defines when the MRP run take place

- This calendar is created by PP module

- PPC Calendar is not required for CBP

MRP Procedure

It is pre-defined in the system, what type of planning you are adopting for MRP

Different Planning runs

Standard Indicators for planning run are

1. Regenerative Planning (NEUPL)

2. Net change Planning (NETCH)

3. Net change Planning in Planning Origin(NETPL)

When you create a material with a MRP views, the material is automatically entered into the Planning. In the planning file on of the planning indicator has to be set. NETCH indicator is set in planning file then the system needs the low level code


- Low level code materials will be planned first.

- Here 0001 code materials will be planned first

- You have to see whether BOM explodes or not

- Normally MRP is used for B&C Type of items

- Any requirement from previous run has to be deleted or included in first planning. It is decided by the MRP controller

- Net Requirement planning is the next step