Material Requirements Planning (MRP) enables you to plan material requirements for a manufacturing
or procurement process.
MRP calculates gross requirements for the highest Bill of Materials (BOM) level based on sales
orders, production orders, forecasts, and so on. It calculates gross requirements at the lowest BOM
levels by carrying down net parent demands through the BOM structure. Dependent levels may have
their own requirements based on sales orders and forecasts.
The results of the MRP run are recommendations that fulfill gross requirements by taking into
consideration the existing inventory levels, existing purchase orders, and production orders. The MRP
run also takes into account defined planning rules for Order Multiple, Order Interval, and Minimum
Order Quantity.
Recommendations are back-scheduled by the defined lead time to arrive at the requirement dates for
their own components.
MRP Process in SAP
SAP Business One lets you divide the MRP run into equal periods of time (for example, weeks or
days). The process always starts with the parent item in the highest level and ends with the last child
item.
Procedure
For every given time period, MRP performs the planning process in the order described below:
Calculations for the Parent Item
1. MRP calculates the quantity required to continue the sales of the final product without any
delays, considering all the resources:
-
Initial inventory (quantity on hand)
-
Receipts: purchase orders, production orders (for the parent item)
SAP Business One then subtracts the following requirements:
-
Sales order
-
Forecast
-
Production order (for the child items)
-
A/R reserve invoice
2. SAP Business One uses the planning policy to make the production or purchase order
recommendations. The planning policy is based on:
-
Lead time
-
Minimum amount
-
Multiples
-
Time intervals
Note
All the above parameters are defined in the Item Master Data window. For more
information, see Defining Initial Settings.
3. After the calculation is completed, SAP Business One issues recommendations to create
production orders for the parent item.
4. To complete the production orders for the parent item, quantities of the child items that comprise
the BOM are needed. SAP Business One calculates the quantity of the child items, considering
the MRP-dependent requirements. SAP Business One then recommends the creation of
purchase orders or production orders for the child items required to produce the parent item.
Calculations for the Child Item
1. SAP Business One calculates the quantity required to continue the sales of the final product
without any delays, considering the following resources:
-
Initial inventory (on hand quantity)
-
Receipts (similar to the calculation for the parent item)
SAP Business One then subtracts the following requirements:
-
All the requirements specified above (similar to the calculation for the parent item)
-
MRP Dependent Requirement – The quantities of child items required to complete the
production orders recommended by MRP for the parent item (requirements for the child
items calculated during the MRP run)
2. SAP Business One uses the planning policy to make the production or purchase order
recommendations, similar to the calculation for the parent item.
After the calculation is completed, SAP Business One issues recommendations for production
orders or purchase orders for the child items.
Note
The process continues in the same manner if the child item has child items of its
own and ends at the lowest level of the BOM.
A Disassembly Production Order appears in the requirements for the parent item
and in the receipts for the child item.
Example
1 piece of the parent item BOM is assembled from 2 pieces of a child item.
1 piece of the child item is assembled from 2 pieces of a grandchild item.
After the MRP run, SAP Business One issues a production order recommendation for 2
pieces of the parent item. In addition, SAP Business One adds the dependent
requirement of 4 pieces for the child item and 8 pieces of the grandchild item.
Copyright © Published April 2013, Author: Laura Haywood-Jeffery, Ownership: Laura Haywood-Jeffery
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