MRP Reorder Point Planning

In the reorder point planning procedure, the system compares available warehouse stock with the reorder level. If available stock falls below the reorder level, an order proposal is generated.

The reorder level (also known as the reorder point) is made up of the sum of the safety stock plus the expected average material consumption within the replenishment lead time. Therefore, when determining the reorder level, you must take safety stock, previous consumption values or future requirements and the replenishment lead time into account.

Safety stock must be set at a level which covers both excess material consumption within the replenishment lead time and the additional requirements which may occur during delivery delays. You must, therefore, take previous consumption or future requirements, and the vendor's delivery timeliness or that of production into account when determining the safety stock level.

Consequently, the reorder level and the safety stock level are central control parameters within reorder point planning. They can be determined automatically by the system or manually by the MRP controller. Thus, a distinction is made between the two following procedures:

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Manual Reorder Point Planning

Automatic Reorder Point Planning