Reorder Point Planning

SAP AG

SAP AG

TAMM10 4.0B

34-1

Reorder Point Planning: Unit Objectives

At the conclusion of this unit,
you will be able to:
Explain the concept and the procedure of

reorder point planning,

Describe the meaning of the reorder point

and of the safety stock in reorder point

planning
Name the data in the material master

record that is necessary for reorder point

planning
Explain the scheduling for reorder point
planned materials
R

SAP AG

SAP AG

TAMM10 4.0B

34-2

Reorder Point Planning : Business Scenario

In manual reorder point planning, the

available stock is compared to the
manually specified reorder point. If the
available stock is smaller than the reorder
point, an order proposal is created by
materials planning.

SAP AG

SAP AG

TAMM10 4.0B

34-3

Reorder Point Planning

Lot size

Stock

Reorder point

Safety stock

Reorder point

Point of Delivery

Replenishment
lead time

Time

SAP AG

The basis of the reorder point planning is the comparison of the available warehouse stock and the fixed
receipts with the reorder point. If the available warehouse stock is less than the reorder point, then the
net requirements calculation is triggered.
The reorder point is composed of the expected average material requirements during the replenishment
lead time and the safety stock. Correspondingly, the following points must be considered when defining
the reorder point:
Safety stock,
Previous consumption or future requirements,
Replenishment lead time.
The safety stock must cover both the unplanned excess material consumption during the replenishment
lead time as well as the additional consumption caused by delayed deliveries.
If you want to take into account sales orders and manual reservations when planning, you can use
another reorder point procedure designed for external requirements.

SAP AG

TAMM10 4.0B

34-4

Net Requirements Calculation for Reorder Point

Planning
Shortage
Order proposal
for lot size quantity

Reorder point

Purchase orders
Firmed planned orders
Firmed purchase
requisitions

Comparison

Stock
R

SAP AG

In reorder point planning, the available warehouse stock comes from the following calculation:
warehouse stock + open purchase order quantity (Purchase orders, firmed planned orders, firmed
purchase requisitions).
There will be a material shortage if the available warehouse stock is less than the reorder point.
The shortage quantity is the difference between the reorder point and the available warehouse stock. The
purchase order quantity is created from the lot-sizing procedure in the material master record.
The system sets the planning date as the basis for the requirements date.

SAP AG

TAMM10 4.0B

34-5

Reorder Point Planning: Forward Scheduling

for External Procurement

Processing time
for purchasing

Planned delivery time

today (Release date)

Goods receipt
processing time

Delivery date

MRP date

SAP AG

The shortage quantity date for materials planned using reorder points is the date of the planning run. If
stock falls short of the reorder point, the procurement must be carried out immediately. The system
defines in scheduling, the date on which the material will be available, from the shortage quantity date.
This procedure is defined as forward scheduling.
In forward scheduling, first of all the purchasing department processing time in work days is added and
then the planned delivery time in calendar days and finally the goods receipt processing time in work
days to the present date. The result of the calculation is the MRP date.
The purchasing department processing time is the time available to the buyer to convert a purchase
requisition into a purchase order; it is defined specifically for a plant in Customizing.
The goods receipt processing time is the period of time between the receipt of a material and the addition
to stock. This time is, for example, required for checking the material and for the process of placement
into storage.
The planned delivery time and the goods receipt processing time are material-specific definitions.

SAP AG

TAMM10 4.0B

34-6

Reorder Point Planning: Unit Summary

In reorder point planning, procurement is

triggered when the stock level falls below the

reorder point.
The reorder point should cover the safety
stock and the average material requirements
expected during the replenishment lead time.
The safety stock covers both excess material
consumption within the replenishment lead
time and any additional requirements that
may occur during delivery delays.

SAP AG

SAP AG

TAMM10 4.0B

34-7