Material Requirements Planning (MRP)
Process
March 2014
INTE
RNA
L
Objectives
At the end of this unit, you will be able to:
Explain the MRP solution concept
List the MRP components.
Explain the definitions relevant to the MRP process.
Run the MRP wizard for different scenarios and explain the MRP
recommendations.
Use the Order Recommendation window to automatically generate
documents to receive or produce recommended supply.
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Business Example
Introducing OEC Computers
OEC Computers resells equipment and office supplies to retailers in the
UK.
Some of the items they sell are assembled and manufactured at OEC
Computers labs.
Michelle, the procurement manager, would like to be able to plan item
availability and item demand ahead of time.
Michelle turned to you, her SAP Business One consultant, to help her
find a solution in the system.
You introduce her to the MRP module.
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Agenda
Introducing MRP
Definitions and planning data
MRP wizard step by step
MRP wizard results and recommendations
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MRP Concept
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MRP Concept - Example
stock / receipts Purchase
Stock Order
Before MRP-run: .pcs 20 .pcs 30
This is the current time
Sales Sales Sales
inventory status and Order Forecast Forecast
planned forecasts for .pcs 40 .pcs 50 .pcs 30
requirements
a purchased item.
Material Requirements Planning
Purchase
stock / receipts
After MRP-run: Stock . P.O Order
. P.O
. P.O
The MRP-run creates .pcs 20 .pcs 30 .pcs 30
.pcs 20 .pcs 20
recommendations for time
Sales Sales Sales
purchase orders (P.O.) Forecast
Order Forecast
to be able to fulfill the .pcs 50 .pcs 30
requirements .pcs 40
requirements.
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MRP Process
Executing recommendations
Production order
Define Run MRP View order Inventory
Planning recommendations transfer request
Data
Purchase
documents
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MRP Components
Sources MRP
Recommendations
Buy
Purchase Order
Purchase Request
Transfer
Inventory Transfer Request
Make
Production Order
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MRP Wizard Results
Report and Recommendations
MRP Report
Periods
Periods (e.g.
(e.g. weeks)
weeks)
MRP Recommendations
Recommended
Recommended
quantity
quantity per
per item
item
Recommended
Recommended
documents
documents to
to
create
create
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MRP Wizard Results
Report - Expanded View
Report
Preview MRP Run Results
# Item Description Past Due 12 13 14
number Date
400
1 C00007 Hard Disk 400 300
Initial 300
Inventory
400 300
Supply
400 300
Demand
Final 300
Inventory
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Demo: MRP Resaults
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Agenda
Introducing MRP
Definitions and planning data
MRP wizard step by step
MRP wizard results and recommendations
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Preparing to Run MRP
Define a forecast
In the item master data of each item:
Update planning data definitions
Update desired inventory level: minimum, maximum or required
Set the holidays and weekends definitions.
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Forecast
Item: Hard Disk Start Date: 01.03 End Date: 31.10. View: weekly
Sales .pcs 1100 .pcs 1100 .pcs 1200 Weeks
.pcs 1000
Forecast:
11 12 13 14
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Forecast
Creating Forecast
MRP Forecast Adjust
Adjust quantity
quantity
Choose
Choose period
period
Daily,
Daily, weekly
weekly or
or monthly
monthly basis
basis
The
The quantity
quantity is
is entered
entered in
in the
the sales
sales unit
unit of
of measurement
measurement
Can
Can change
change multiple
multiple row
row quantities
quantities with
with a
a single
single click
click
The
The view
view cannot
cannot be
be changed
changed once
once the
the forecast
forecast is
is saved
saved
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Forecast
Generate Forecast
2nd step - Define the new forecast data
3
riod
pe
s
nth
o
m
1st step -
Choose
Generate
Forecast
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Demo: Forecast in the MRP Results
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Item Master Data Planning Data (1/2)
Item Master Data
Item Number C00007
Description Hard Disk Seagate 400 GB
Planning Data
Planning Method MRP / None
Procurement Method Make / Buy
Order Interval Weekly / Monthly /
Order Multiple 50
Minimum Order Qty. 100
Lead Time 10 Days
Tolerance Days 2 Days
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Item Master Data Planning Data (2/2)
Item Master Data
Item Number C00007
Description Hard Disk Seagate 400 GB
Planning Data
Planning Method MRP / None
Procurement Method Make / Buy
Order Interval Weekly / Monthly /
Order Multiple 50
Minimum Order Qty. 100
Lead Time 10 Days
Tolerance Days 2 Days
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Basic Scenario Planning Data Influence
Keyboard Hard Disk Procurement Method = Buy
Comfort Seagate 400
USB GB Order Interval = once a week
Demand for week 13 400 pcs 80 pcs MRP run = weekly
Demand for week 14 300 pcs 120 pcs
The demands are due at the
Order Multiple (pcs) 100 50
beginning of the week
Lead Time (days) 3 10
Report
# Item number Description 11 12 13 14
400 300
1 C00007 Keyboard 400
Comfort USB
2 C00009 Hard Disk 100 150
Seagate 400 GB
* Assuming no initial quantity or supply exist
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Demo: The Effect of the Planning Data on the MRP Results
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Inventory Levels
Item Master Data
Item Number C00007
Description Hard Disk Seagate 400 GB
Inventory Data
Manage Inventory by Warehouse
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Holidays and Weekends Consideration
Administration System Initialization Company Details Accounting Data Tab Holidays
In the MRP run you can choose whether or
not to consider holidays and weekend
definitions.
When using a weekly forecast, note that the
weekend definition sets the first day of the
week.
The option Set Weekends as Work Days
defines holidays as the only non-working
days.
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Agenda
Introducing MRP
Definitions and planning data
MRP wizard step by step
MRP wizard results and recommendations
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MRP Wizard Overview
Scenario Selection
Step 1 Creation of a new MRP scenario or choosing one from a list
Scenario Details
Step 2 Planning horizon definition and other definitions affecting lead time
Item Selection
Step 3 A range or specific items
Run By
Step 4 Company or warehouse
Document Data Source
Step 5 Source of demand and supply, and recommendation preferences
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MRP Wizard - Step 1: Scenario Selection
MRP MRP Wizard
OR Create
Create New
New Scenario
Scenario
Select
Select Existing
Existing
Scenario
Scenario
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MRP Wizard - Step 2: Scenario Details
Planning Horizon
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Demo: MRP Wizard Step 2 Planning Horizon
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MRP Wizard - Step 2: Scenario Details
Other Scenario Details
Definitions affecting Lead
Time calculation
Display
Preferences
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MRP Wizard - Step 3: Item selection
From Item master Data MRP Definition
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MRP Wizard - Step 4: Inventory Data Source
Quantities
Quantities of
of existing
existing
inventory,
inventory, demand and
demand and
supply are consolidated
supply are consolidated
and
and recommendations
recommendations
are
are made to
made to the
the default
default
..warehouse
warehouse
For
For each
each warehouse
warehouse
the
the existing inventory,
existing inventory,
demand,
demand, supply and
supply and
recommendations
recommendations areare
calculated separately
calculated separately
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MRP Wizard - Step 5: Documents Data Source
Sources
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MRP Wizard - Step 5: Documents Data Source
Recommendations
Sources Recommendations
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MRP Wizard - Step 5: Document Data Source
Time Range
Document Data Source
Time Range
Within Planning Horizon
Include Historical Data
Report
# Item number Description Historic Data Past Due Data
1 C00007 Keyboard Consolidated open
Comfort USB Consolidated open data for the period
2 C00009 Hard Disk historic data between the start
Seagate 400 GB date and today
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Demo: MRP Wizard Step 5 Time Range Effect
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Agenda
Introducing MRP
Definitions and planning data
MRP wizard step by step
MRP wizard results and recommendations
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MRP Report
Report Expanded View
Preview MRP Run Results
# Item number Description Past Due 11 12 13 14
Date
1 C00007 Recommendations
Recommendations row
row
Initial Initial
Initial inventory
inventory that
that derives
derives from
from the
the Final
Final Inventory
Inventory of
of
Inventory ..the
the former
former period
period
Supply
Expected
Expected positive
positive inventory
inventory receipts
receipts
Demand
Expected
Expected inventory
inventory releases
releases from
from stock
stock
Final Period
Period column
column sum:
sum: Initial
Initial Inventory
Inventory + Supply -
+ Supply
Inventory Demand
Demand
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MRP Report Timeline
Planning Horizon Planning Horizon
start date Today end date
Historic Data Past Due Data Planning Horizon from today Future Data
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Demo: Past Due Data and Future Data columns
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MRP Report
Color Legend
White
Dark Grey Pale Grey
Dark grey area = Lead Time period when demand cannot be fulfilled.
Pale grey area = The period for which recommendations will be received on time
White item row = Total of supply and initial inventory exceeds demand for the period.
100 Red quantity = Recommendations that cannot be fulfilled or not fulfilled on time.
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Analysis of the MRP Report
Preview MRP Without Recommendations
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Analysis of the MRP Report
Preview MRP Run with recommendations
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Analysis of the MRP Report
Pegging Information
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Analysis of the MRP Report
Basic Scenario (1/2)
Scenario details for Hard Disk item
Minimum Order (pcs): 100 Lead Time (days): 10 MRP run date: 10.3.14
Order Multiple (pcs): 50 Run By: Company
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Analysis of the MRP Report
Basic Scenario (2/2)
Scenario details for Hard Disk item
Minimum Order (pcs): 100 Lead Time (days): 10 MRP run date: 10.3.14
Order Multiple (pcs): 50 Run By: Company
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Demo: MRP Report
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Analysis of the MRP Report
Inventory Transfer Request Scenario
Scenario details for Hard Disk item
Minimum Order (pcs): 100 Lead Time (days): 10 MRP run date: 10.3.14
Order Multiple (pcs): 50 Run By: Warehouse Inv. Tran. Req. Recommend
Initial qty. in WH 01 500 Initial qty. in WH 02 60
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Filter Possible Problem Items
Items with demand that cannot be met on time appear with red recommendation
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MRP Results - Recommendation Tab
Purchase Order
Recommendation
Inventory Transfer
Default preferred vendor Request recommendation
Saved recommendations will be used in
the Order Recommendation window
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Order Recommendation Window
MRP Order Recommendation
Context menu of the Item
Number field
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Demo: Order Recommendation Window
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Summary (1/3)
Key points:
The MRP is a planning tool that calculates material requirements for made or
bought items by processing the demand, supply and item quantity.
In order to receive recommendations for buying, producing or transferring
items we run the MRP wizard.
The demand for items is derived from sales documents, forecast, production
orders, defined inventory levels and inventory transfer requests.
The wizard also considers expected supply from purchase orders, production
orders and purchase blanket agreements.
The results of the MRP wizard run are the MRP recommendations. The
recommended documents can be: purchase orders, purchase request,
inventory transfer requests and production orders.
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Summary (2/3)
Key points:
The forecast purpose is to plan stock level in advance, before receiving
actual requirements like sales orders.
In the planning data of the item master, we set different parameters like order
multiples and lead time that affect the MRP recommendations.
The MRP scenario is the set of parameters defined throughout the wizard
steps, that determines the MRP results.
The MRP horizon is the period for which the wizard displays the MRP results.
The MRP results also display the past due data and future data. You can also
choose to display historic data prior to the MRP horizon.
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Summary (3/3)
Key points:
There are four elements in the MRP Result: Initial Inventory, Supply, Demand
and Final Inventory
SAP Business One uses different colors to visualize the MRP results.
In the Recommendation tab of the MRP results we see the list of all
recommended documents.
From the Order Recommendation window we can generate the
recommended documents.
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