Item Reorder Policy

The production orders and purchase orders planned by the MRP procedure depend on the reorder policy chosen in the dropdown lists and on the values entered in the associated fields. Note that the labels of the parameters fields vary according to the reorder policy.

The Frozen horizon field and the Planning Group dropdown list appear only at the advanced level.

The Standard lot size and the Simulated lot size appear only if the Costing option is activated.

The Annual Demand field is used to calculate the Economic Order quantity as well as in the Global Flow Analysis module.

The Variability field is used only in that module.

Four main reorder policies are available and several lot-sizing rules are associated with each reorder policy:

• MM: the Manual Management reorder policy

o No replenishment (purchase requisition or work order) is automatically suggested by the requirements calculation. It is nevertheless possible to create work orders manually or purchase requisitions manually for an item managed according to this rule.

• R: the Requirements reorder policy

o L: Lot for lot: an order for a quantity equal to the net requirement is created each time the available inventory becomes negative.

o Daily requirements: an order is created when the available inventory becomes negative. The size of this order is equal to the minimum batch or to the need if this one is greater than the release quantity. The Minimum batch field has to be filled in.

o W: Weekly requirements: an order is created when the available inventory becomes negative. The size of this order is equal to the requirements for each week.

o M: Monthly requirements: an order is created when the available inventory becomes negative. The size of this order is equal to the requirements for each month.

o P: Period of supply (in days): an order is created when the available inventory becomes negative. The size of this order is equal to the sum of the requirements on the number of days indicated in the Period of Supply field.

o F: Fixed quantity: when the available inventory becomes negative, one or several orders (of the fixed quantity specified) are created. It is worth noting that it can result in several orders for the same date in order to meet the requirements.

• I: the Inventory reorder policy

o For each item managed on inventory reorder policy, an order is created if the available inventory level (i.e. the inventory plus the firm and planned orders) goes below the quantity indicated in the Reorder point field.

o Q: Fixed quantity: the size of the order is equal to or greater than the contents of the Economic Quantity field.

o R: Replenishment: the size of the order is equal to the difference between the Replenishment Level and the available inventory.

o F: Fixed quantity: the size of the order is equal to the fixed quantity specified (it can result in several orders for the same date to meet the requirement).

• PR: Managed by project

o This policy is similar to the lot for lot policy: an order is created when the available inventory becomes negative for a quantity equal to the net requirement. A detailed description of the Project Monitoring function is provided in the Sales chapter.

Fields

Safety Stock:	This field defines the minimum quantity that has to remain available in inventory. The MRP calculation subtracts the safety stock from the available inventory.
Minimum Batch:	This field defines a minimal release quantity.
Order Point:	This field defines the order point for the items managed by the IF reorder policy.
Economic Quantity:	This field defines the lot size for the items managed by the IF reorder policy.
Target Level:	This field defines the replenishment level for the items managed by the IR policy
Multiple Quantity:	This field defines a multiple release quantity. The computed release quantity will be rounded up to the next integer number of the largest “Multiple quantity”. In order to generate the exact requirement, enter 0 in this field.
Maximum Quantity:	This field permits indicating a maximum quantity for a work order. If the requirement is higher than this maximum quantity and if the "Automatic split of long WO’s" option (Planning tab, Preferences window) is activated, the requirements calculation procedure will generate several WO’s at the same date in order to respect this constraint of maximum batch size. This permits, when work centers have several machines, to simultaneously work on several batches.
Period of Supply:	This optional numerical field is expressed in number of days. This field defines the number of days for ‘requirements collecting’ used by the requirements calculation for the items managed according to the RP management mode.
Lead-time:	This optional numerical field is expressed in number of days. This field defines the standard lead-time between the order release and the item availability. Its minimum value is 1 day. This field is used in the requirements calculation to determine the requirement dates of the components of an item from the requirement dates of the item itself: these component requirement dates are computed by a simple shift of the lead-time (in number of days on the standard calendar). See the explanations about the lead-time below.
Frozen Horizon:	This optional numerical field is expressed in number of days. This field defines a number of future days during which • New sales forecasts are not taken into account in the net requirement calculation • New sales orders cannot be entered if their shipping data are inside the frozen horizon. The aim of this frozen horizon is to stabilize the master schedule.
Std Lot Size (Budget):	This field is a numeric field, which must be positive. It is used to compute the cost of the item, by taking into account the fixed scrap that may appear in the product structure record.
Simulated Lot size:	This field is a numeric field, which must be positive. It is used to calculate the item cost (which in general includes setup costs which have to be taken into account).