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Lot Size Planning in IBP

SAP Integrated Business Planning supports the following lot-sizing procedures:

Lot for lot

Periods of supply, comprising static periods of supply and dynamic periods of supply.

Production cycle lot size

You specify the lot-sizing procedure you want to use on the location product level using
the LOTSIZEPOLICY attribute. The following table shows the options available for this attribute:

Setting Lot-Sizing Procedure

0 Lot for lot (the demand for each period is produced in


that period).

1 Static periods of supply

2 Dynamic periods of supply

3 Production cycle lot size

Lot-size parameters also affect lot sizes as they determine their range (that is, the minimum and
maximum size) and whether a lot-size quantity has to be a multiple of a given increment, called
the rounding value. You define lot-size parameters on the level of production or location source
of supply.

Lot for Lot

Using this lot-sizing procedure (the default) means that the heuristic doesnt bundle the demands
for subsequent periods. The demand for each period is satisfied by a receipt in each period.

Only the heuristic explicitly follows the lot-for-lot strategy when generating a supply plan. It has
no impact on the optimizer because the optimizer calculates lot sizes according to minimal costs.
If stock holding costs are low and fixed production costs are high, the optimizer might decide to
bundle the demand of subsequent weeks, for example, to save fixed production costs or to
minimize the effect of increasing purchasing costs. If, in contrast, fixed production costs are low
and stock holding costs are high, it might be cost optimal to produce the demand of each period
in that period, that is, to follow a lot for lot strategy.

To use this lot-sizing procedure, set the LOTSIZEPOLICY attribute to 0 (zero) on location
product level.

Highlight: Input Key figure LOTSIZEPOLICY in the Location Product template.

Output key figures representing transport receipts, production receipts

Production Cycle Lot Size

This lot-sizing procedure is only relevant for production sources of supply. A production cycle
defines the frequency in which a product is produced (for example, every 90 days). For location
products that follow such a production cycle, the system builds up stock (in each period with a
production event) that covers the demand of all subsequent periods until the next production
period, that is, until the next period with production receipts greater than zero.

To use the production cycle lot size lot-sizing procedure, set the LOTSIZEPOLICY attribute to 3
on location product level and define the attribute PERIODSOFCOVERAGE on production source
level.

Both the heuristic and the optimizer then build up stock to cover the net demand of a definable
number of future successive periods. You define the number of periods in
the PERIODSOFCOVERAGE attribute. Stock is then built up to cover the net demand, which is
passed to a production source.

The ADDITIONALLOTSIZEDEMAND key figure shows you how many additional units of a
product have to be kept in stock to satisfy the demand generated by using this lot-sizing
procedure.
Periods of Supply

This lot-sizing procedure builds up stock to cover the demand of the current period and a
definable number of subsequent periods so that stock is high enough to cover the demand for
these future periods. It bundles the dependent demand or the production demand of the current
period and a certain number of subsequent periods into one transport or production receipt
planned for the current period.

You define the number of subsequent periods in the input key figure SUBPERIODSOFSUPPLY-
Target Periods of Supply.

You have the following options with this lot-sizing procedure:

Static periods of supply

Dynamic periods of supply

Sub period Number

You define the number of sub periods in the input key figure SUBPERIODNUM- Number of
Sub periods for each period of the planning horizon. If SUBPERIODNUM contains a value
greater than zero, the coverage time span is defined in the number of sub periods.
If SUBPERIODNUM is empty, the coverage time span equals a multiple of periods

Understanding: In the key figure SUBPERIODSOFSUPPLY, specify the number of sub


periods to be covered, for example, 15 in one period, 30 in the next. If you specify 30
in SUBPERIODNUM and 15 in SUBPERIODSOFSUPPLY, the projected stock at the end of
the period covers 15 from 30, that is, 50% of the dependent demand of the subsequent period.

(It's assumed that the dependent demand of a period is equally distributed over all subperiods of
that period.)

Highlight: Input Key figure

SUBPERIODNUM at Week prod Location level

SUBPERIODSOFSUPPLY at Week prod Location level


Use Inventory Target Instead of Periods of Supply?

Instead of using the periods of supply lot-sizing procedure, you could specify a safety stock
independent of the dependent demand of future periods using the inventory target input key
figure (INVENTORYTARGET). This has certain disadvantages, as follows:

If the subsequent periods dont have any demand (or less than expected demand), the safety
stock would be built up unnecessarily.

If future demand is higher than expected, the target stock might be too low to cover it all.

You could use both the static periods of supply lot-sizing procedure and
the INVENTORYTARGET key figure so that the system has to take into account dependent
demand, projected stock of the previous period, and the demand possibly caused by inventory
target when calculating a periods net demand.

Highlight: Input Key figure

INVENTORYTARGET at Week prod Location level

Static Periods of Supply

This lot-sizing procedure aims to build up safety stock that covers the dependent demand of a
definable number of subsequent periods. You specify the number of subsequent periods in the
input key figure Sub periods of Supply (SUBPERIODSOFSUPPLY).

key figureAdditional
Lot-Sizing-Procedure
Demand (ADDITIONALLOTSIZEDEMAND) shows you how many additional units of a
product have to be kept in stock to satisfy the demand generated by using this lot-sizing
procedure.

Both the heuristic and the optimizer take static periods of supply into account.
Testing : SOP1

Ref:

https://uacp2.hana.ondemand.com/viewer/feae3cea3cc549aaa9d9de7d363a83e6/1702/en-
US/0c0fa8658c7d47d1bda4f6c703009ed7.html

Stock on Hand : INITIALINVENTORY

Supply Shortage : KPI: Safety Stock Deficit (Absolute)

Safety stock planned ,

Safety days (Supply) : IOSAFETYDAYSSUPPLY

Safety stock : SOPSAFETYSTOCK


Reorder Point ,

Target days supply ,

Target Stock level ,

Days Supply : SAFETYDAYSSUPPLY

IBP

Recommended Safety Stock

Safety Stock Delta