The IRP Generation process collects data relative to all material needs of manufacturing and distribution, and makes recommendations. Depending on which modules are integrated with the Inventory Requirements Planning module, the system looks at data in up to six different modules (Inventory Management, Sales Order, Purchase Order, Bill of Materials, Inventory Requirements Planning, and Production Management).
Note: If Inventory Requirements Planning is integrated with Production Management and you're exploding subassemblies, we recommend using Enhanced Scheduling to properly schedule work tickets. For more information, see Set Up Enhanced Scheduling.
The system looks at supply based on inventory stock levels, existing work tickets and open purchase orders; and at demand based on open sales orders, sales projections, and work ticket component requirements.
Product build times, lead times, and supply and demand functions are combined to estimate the need for an inventory item. Inventory Requirements Planning produces action recommendations based on an "action" date that advises the material/purchasing manager of which orders to place, change, and cancel based on the last IRP Generation process. The system uses either the vendor lead time or the work ticket template. The required date for inventory level recommendations is based on the Inventory Requirements Planning accounting date plus the item's lead time.
During the IRP Generation process, IRP scans the relevant modules and disassembles the bill of materials. You can view the recommendations calculated from the IRP Generation process on the Inventory Requirement Planning Report or in Inventory Requirements Planning Inquiry. You can also view the recommendations by clicking or in the Inventory Requirements Planning window.
BC Lines are for an item with a "Make" procurement type that exist as a bill of material.
Bill Options entered during Sales Order Entry are supported if the work ticket was created for the sales order manually as the option's components would be exploded into the work ticket as components.
If you are using bill revisions in the Bill of Materials module, IRP always uses the current revision of a bill when recommending a "Make" for a top-level item. If a bill of material contains a subassembly that is not the current revision, IRP will use the revision specified in the bill of material lines.
If a work ticket exists for a revision other than the current revision or a bill contains a subassembly that is not the current revision, and the Use Bill Revisions check box is cleared in the Bill of Materials Options window, IRP uses revision 000 to process components. If revision 000 does not exist, components will not be exploded for the bill on a new "Make" recommendation.
The following example shows the IRP interactions between a bill of materials structure and the Inventory Requirements Planning Report. In its simplest form, a bill consists of one or more components used to manufacture an assembly or finished product. If such a bill does not contain any other assemblies as components, it is defined as a single-level bill.
This example shows how a single-level bill of materials with an attached sales order (demand) is transformed into the IRP actions by executing the IRP Generation process.
The parent bill consists of two separate component items. The number in parentheses indicates the quantity of each component item required to complete the bill. Assume that there is no inventory in stock and no existing purchase orders or work tickets. There is a sales order for customer ABC for two BILL001s for delivery on 05/31/03.
BILL001 Build Time = 6 days
ITEM1 (Qty = 1) Lead Time = 4 days
ITEM2 (Qty = 2) Lead Time = 10 days
The IRP Generation process uses the bill of materials structure to disassemble all components into the lowest level items. If an item is listed as being a subcontract or buy item in the inventory, the disassembly goes no further. IRP Generation uses the lead time or build time to determine when an action needs to be initiated. It also considers all materials supplied from on-hand inventory, existing purchase orders, or work tickets that are in process. Additional demands (not shown in this example) may come from projected demands.
The resulting Inventory Requirement Planning Report suggests a "Make" action by 05/25/03 for BILL001 due to its 6-day build time. It also suggests purchase orders for the component items. The "action" date for the components reflects the vendor lead times for each component.
For more information, see:
IRP Recommendations Based on the Reorder Method