EIS Reorder Point Planning

Transcription

1 EIS Reorder Point Planning

2 Reorder Point Planning Reorder point (ROP) planning is a consumption-based MRP procedure Order / Production is triggered when the total amount of on-hand and on-order stock falls below the reorder point Order / Production quantity is determined based on batch size or Target Inventory Position (TIP); EOQ for simple models Periodic Planning is fixed period, variable order quantity Reorder Point is fixed order quantity, variable period 2014 SAP AG or an SAP affiliate company. All rights reserved. 2

3 Reorder Point Logic Static Example Pipeline Stock Forecast Requirements within Lead Time Batch Size ROP 1 1 Order Received Order Placed Safety Stock Time Replenishment Lead Time 2014 SAP AG or an SAP affiliate company. All rights reserved. 3

4 Reorder Point Calculations Reorder point is the minimum inventory level that covers expected material requirements during the replenishment lead time, and; protects against shortages due to fluctuations in demand during the replenishment lead time Reorder point = forecast demand within the replenishment lead time + safety stock Reorder point targets are time-varying since demand is timevarying SAP EIS tool calculates ROP targets at the item-location-period granularity 2014 SAP AG or an SAP affiliate company. All rights reserved. 4

5 Reorder Point Example Demand: 100 +/- 25 Lead Time: 1; PBR: 1 Service Level = 95% Initial On-Hand = 58 units Initial Planned Receipts = 100 units Period Forecast Forecast Err Sigma Target Inv Position Target Safety Stock Reorder Point ROP 58 On-Hand Stock - End of Prev Per Beg of Per After Rcpt End of Per Avg Orders Planned Receipts Pipeline Stock Cycle Stock - Beg of Per After Rcpt End of Per Avg SAP AG or an SAP affiliate company. All rights reserved. 5

6 Reorder Point Insights If future forecasts are increased, ROP increases If replenishment lead time increases (or is reduced), ROP increases (decreases) Forecast error, service level metric, and service level target significantly impact ROP 2014 SAP AG or an SAP affiliate company. All rights reserved. 6

7 Thank you 2014 SAP AG or an SAP affiliate company. All rights reserved.

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