MRP Recommendations Based on the Reorder Method

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MRP recommends a reorder quantity based on the reorder method selected for the make item in Inventory Management, using the following calculations:

For all reorder methods: If the minimum order quantity exceeds the quantity to be ordered, MRP will recommend ordering/making the minimum order quantity. Inventory level (IN) recommendations will use the MRP Accounting Date plus the vendor lead time to determine the Required Date.

Reorder Point method: When the projected on-hand quantity falls below the reorder point quantity, MRP will recommend making or ordering up to the reorder point quantity. The inventory level calculation uses the system date plus the item’s lead time to calculate the reorder point quantity and date. If there are purchase order, work order, or sales order line items that have a required date before the calculated inventory level date, the "Make" recommendation for the first action lines will be equal to the demand. The inventory level calculation will then make up the difference between the projected quantity on hand versus the reorder point.

Economic Order Quantity method: When the projected on-hand quantity falls below the reorder point quantity, MRP will recommend ordering/making the economic order quantity. If the economic order quantity is not sufficient to meet the reorder point quantity, MRP will recommend ordering/making up to the reorder point.

Maximum Stock Level method: When the projected on-hand quantity falls below the reorder point quantity, MRP will recommend making or ordering up to the reorder point quantity. The maximum on hand quantity is not factored into the MRP recommendations.

Example - Reorder Point Reorder Method

The make item, Board-04230-33, has a quantity on hand of 10, a lead time of 7 days, and uses the Reorder Point method. The reorder point for the item is 25. The item has a sales order with 15 items required on 5/31/03 and 10 required on 6/05/03. With the MRP Accounting Date set to 5/31/03, MRP Generation will recommend making 15 items by 5/31/03, 10 by 6/5/03 and 15 by 6/7/03. The Economic Order Quantity is not considered when the item uses Reorder Point method.

Example - Economic Order Quantity Method

The make item, Board-04230-33, has a quantity on hand of 10, a lead time of 7 days, and uses the Economic Order Quantity method. The reorder point for the item is 25 and the economic order quantity is 30. The item has a sales order with 15 items required on 5/31/03 and 10 required on 6/5/03. With the MRP Accounting Date set to 5/31/03, MRP Generation will recommend making 30 by 5/31/03 and 30 by 6/05/03.

For more information, see The MRP Generation Process.