22 September, 2020
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 is planned for extra care.
CBP: Procurements are triggered based on the past consumption parameters or forecast planning
In CBP there are 3 procedures:
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When the stock level falls below the ROP, the system suggests 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
Note: 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 the 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:
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 overlapping: you can allow the splitting and the overlapping of LOTs
2. Periodic Lot sizing Procedure
Here you can have
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 optimum
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
Based on the past consumption values, the requirements are forecast for the future.
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
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. The vendor waits for receipts for GR
ii. Goods at the plant and wait for GR
iii. If the receipt is not done on Friday, then it has to be done the next Friday.
iv. You have to plan the material accordingly.
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 Or 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 the 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
When you create a material with an MRP view, the material is automatically entered into the Planning. In the planning file one of the planning, indicators has to be set. NETCH indicator is set in the 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 the previous run has to be deleted or included in the first planning. It is decided by the MRP controller
Net Requirement planning is the next step
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