Background: Material Requirements Planning

Use the Material Requirements Planning (MRP) program to calculate time-phased requirements for raw material and components, plan the timely replenishment of inventory, and reschedule or cancel existing non-firm orders. See Road Map for work flow.

This topic has these subtopics:

MRP Processing	Reschedule Assumption Method
Action File	MRP Calculations
Order Codes	Net Requirements
Review Period	Lot Sizes
Cushion	Supply Chain
Non-Firm Orders	Advisory Messages
Lead Times	Standard Messages
Replenishment Orders	Material Requirements Planning Report
Requisition Types	Reprinting

MRP Processing

Material Requirements Planning processes items in the MRP action file. The system adds items to the action file as a result of almost any action that affects the item's status. You can also manually add items to the action file with the MRP Action File Maintenance (MAF) program.

The program processes the action file beginning with top assemblies with the highest low level code. If the program takes action on an item at one level, it also processes all subordinate items in the structure. Material Requirements Planning completes the processing of all items at the highest level before moving to items at the next subordinate level.

Material Requirements Planning plans for a manufacturing branch. The program uses demand from all branches in the manufacturing branch's demand group and supply from all branches in its supply group.

Material Requirements Planning reschedules existing planned and released orders, plans new orders, and deletes surplus non-firm planned orders to achieve a production schedule that meets gross requirements and prevent the available inventory from going below zero.

Material Requirements Planning produces a production schedule for a 50-period planning horizon, based on your login date, but displayed based on the Horizon date that you enter at runtime. The first period in the 50-period horizon is Past Due and the last period is Future.

Material Requirements Planning produces a report similar to that produced by Planning Profile Maintenance (MPM) for manual planning. Both programs calculate requirements and availability for an item on a daily basis. However, Planning Profile Maintenance does not plan or reschedule planned orders.

Under these conditions, the program prints messages advising you that the rescheduling of existing firm planned and released orders should be done manually if that action is really needed. If an item's existing orders cannot cover the past due or future requirement, the program plans additional orders for that item. However, if there are sufficient existing orders to meet past due or future requirements, the program issues advisory, re-planning messages, and completes the planning on the basis that the advised action will be taken. This assumption that the advised action will be taken is also known as the "rescheduling assumption" mode of MRP operation. See Reschedule Assumption Method for more information.

Some replenishment orders cannot be rescheduled or cancelled; these orders are "firm." Material Requirements Planning prints advisory messages regarding firm orders to describe the necessary action (reschedule, cancel, or release). Subsequent planning is based on the assumption that the advised action will be taken. Such advisory messages represent unresolved actions, and the program stores the item in the action file so that the item will be processed again during the next MRP run.

Action File

Material Requirements Planning plans, cancels, or reschedules orders to meet requirements on items generated by manufacturing orders for parent assemblies, sales of the item, and unplanned material requisitions (for example, spares and spoilage). Items are loaded into the action file as a result of almost any action that affects the status of an item, including:

Changes to	Programs
Forecasts	Created by Forecast Calculation (MFC) or maintained by Forecast Maintenance (MSF)
Manufacturing orders	Maintained by Manufacturing Order Maintenance (MIM).
Planned orders	Maintained by Planning Profile Maintenance (MPM).
Manufacturing receipts	Over or under receiving an order and marking the order as complete in Finished Goods Planning (MFP).
Purchase order receipts	Over receiving a purchase order line or closing a purchase order line that was received short with Receiver Maintenance (IRC).
Purchase orders	Creation of a purchase order line in PO Maintenance (VOE).
Material issues	Issuing material to a manufacturing order outside the normal quantities required for that order with Manufacturing Order Maintenance (MIM), Material Usage Maintenance (MUA), Picking Confirmation (MPK) or Secured Picking (SMPK).
Quantity adjustments	Any item that has a variance when processed by Physical Inventory Update (HCU). Also any item that has its on-hand balance changed with Material Issues and Adjustments (IMI).
Bill of material	Any change to a bill of material for an existing item through Bill of Material Maintenance (MPS) or any change to the ECL code in the Branch Item file by Branch Item Maintenance (IMB).
Customer orders	Any sales order entered with Sales Order Maintenance (OE) that doesn't have any forecast left to consume or not enough available. Also, if the item is coded as a non-finished good (for example, an order code 2 item) and is sold, it is added to the action file.
Inventory maintenance	If changes are made in Branch Item Maintenance (IMB) to any fields that impact planning (for example, Lot Size, Min Order Qty, or any of the lead times), the item is added to the action file.
Components	Any change to a manufacturing order's bill of material with Material Usage Maintenance (MUA).

You can also add items to the action file using the MRP Action File Maintenance (MAF) program. You can select individual items or groups of items by item number, planner code, warehouse code, product class or those with overdue purchase orders. Selecting the Regenerative? runtime option in MRP is comparable to loading all items into the action file with MAF.

When a processing cycle is complete, Material Requirements Planning deletes all items from the action file. However, the program writes items with "unresolved" actions (for example, items that have exception messages) back into the action file.

Order Codes

An item's Order Code, maintained in Enterprise Item Maintenance (IM), determines whether Material Requirements Planning processes an item.

Order code	Material Requirements Planning
0, finished goods items	Does not plan.
1	Prints a report of the item's requirements, but you must perform the actual creation of planned orders and rescheduling of existing orders manually.
2	Creates planned orders to meet requirements, and whenever possible reschedules both planned and released orders to meet requirements.
3, service items	Does not plan.
4, tool crib items	Does not plan.

Review Period

While Material Requirements Planning always plans based on the login date, you can enter a horizon date, which is the first period date to report. The program combines any earlier order or forecast data into a prior category. Although the program uses the login date for planning, you can adjust the horizon date to provide a detailed view of past and future requirements.

The program reviews forecasts and planned orders for an item based on the review period, which can also be called the production planning time fence. The review period begins on the horizon date that you select.

Cushion

The program adds the cushion days that you enter in the program options to the accumulated lead time for the item. The cushion is the number of days to hold a current order firm. It is used to extend or decrease the length of the planning time fence.

You can enter a positive or negative number of cushion days. Enter a negative cushion if you have orders that have not been completed prior to the horizon date, and you do not want the program to print messages for them.

The program perceives that orders that fall within the review period may not be filled due to lack of time and those beyond the review period are feasible.

Non-Firm Orders

The Material Requirements Planning program deletes all non-firm orders outside of the review period and then re-plans an item.

Lead Times

Material Requirements Planning uses lead times to determine when components will be required to go into the next level assembly. Lead time is the number of shop days required to procure or build an item. The program calculates the lead time based on the item's setting in the Make/Buy/Kit field in the Enterprise Item Maintenance (IM) program:

Item	Lead times
Make	Order prep LT + Mfg LT + Put-away LT
Buy	Order prep LT + Intransit LT + Put-away LT

Replenishment Orders

This table lists the transaction types processed by Material Requirements Planning, and the possible firm or non-firm status of each:

Transaction type	Firm or non-firm status
Released Orders	Designated firm or non-firm when released with Manufacturing Order Maintenance (MIM), Requisition Maintenance (IRM), Consolidate Manufacturing Requisitions (MOCR), or Order Release Selection (MRR).
Planned Orders	Designated firm or non-firm when planned by Planning Profile Maintenance (MPM).
Planned Orders (created by Material Requirements Planning)	Always non-firm
Purchase Requisitions	Always firm
Purchase Orders	Always firm

Requisition Types

In this program, manufacturing, purchase, and unassigned requisitions are considered supply. Transfer requisitions are either supply or demand depending on whether the branch is the action (demand) or requesting (supply) branch.

Note
If the demand order for the requisition is a sales order, then the requisition is considered "Firm" and cannot be moved.

Reschedule Assumption Method

The planning performed by Material Requirements Planning assumes that the action suggested by the re-schedule message will be implemented. This is known as the Reschedule Assumption method of MRP planning. This table lists the actions that will be taken to meet requirements in this sequence of priority.

Sequence	Transaction type	Action
1	Non-firm released orders and requisitions	Reschedule and issue rescheduled messages
2	Firm released orders and purchase orders	Issue advisory messages to reschedule
3	Firm planned orders and purchase requisitions	Issue advisory messages to reschedule
4	Non-Firm planned orders	Reschedule and / or change order quantities (no rescheduled messages)
5	Insufficient supply	If requirements have not been met after all existing orders have been processed, Material Requirements Planning creates non-firm planned orders to cover the requirements.
6	Excess supply	If requirements have been met in full, Material Requirements Planning deletes any surplus non-firm planned orders with no messages. For all other orders and requisitions, the program issues advisory messages to cancel the orders.

Additionally, Material Requirements Planning issues these messages regarding late orders:

Released orders with a due date prior to the current date are marked with "past due" messages.
Planned orders with a start date (due date minus lead time) prior to the horizon date are marked "Late for Release."

MRP Calculations

Material Requirements Planning plans and reschedules orders on the basis of an item's projected on-hand balance, calculated using these formulas:

Requirements and balances	Time period	Formula
Gross requirements	Each	Requirements generated by planned and released manufacturing orders for parent items + (Scrap allowance percent x above requirements) + Forecast variance + Actual demand for the item + Safety stock Note If a parent is a buy item in the Enterprise Item Maintenance (IM) program, its requirements will not be transferred to its components even if there is an existing bill of material.
On-hand balance	Horizon start date	On-hand quantity + Intransit quantity to branches + Floor stock + Planned and released replenishment orders for the item - Gross requirements
Projected on- hand balance	Subsequent periods	On-hand balance of the prior period + Planned and released replenishment orders for the item - Gross requirements

Net Requirements

When an item's projected on-hand balance becomes negative (defined as the net requirements) during a particular period, Material Requirements Planning either consumes available supply (for example, open purchase or manufacturing orders) and/or creates additional planned orders to net the project on-hand quantity to zero. The program assigns new release dates to rescheduled orders, and assigns release dates and order quantities to planned orders.

Lot Sizes

Order quantities are based on these fields in the item's Branch Item record, which you can maintain with the Branch Item Maintenance (IMB) program: Max plan per, Min order qty, and Lot size.

For a Max plan per value of 0 or 1, the order quantity is the net requirement for the day in which the order is scheduled. If Max plan per is X (X greater than 1), the order quantity is the net requirement for X days beyond the start date on which the order is scheduled. The order quantity can be modified by this logic:

For a Min order qty greater than the net requirement, the order quantity is the minimum order quantity.
For a Lot size of 0 or 1, the order quantity is the net requirement or the minimum order quantity, as defined above. For a lot size of Y (Y greater than 1), the order quantity is a multiple of the Lot Size, so that the order quantity will be equal to or greater than the net requirement and the minimum order quantity.

Supply Chain

If you selected the Supply chain active? option in the System Options Maintenance (XM) program (Purchasing Options), Material Requirement Planning generates a requisition based on the requirements between when you run the plan in MRP and the number of days in the Fab days firm field set in the Vendor Contract Maintenance (VCM) program.

This program only includes planning for vendor contracts with the Planned? option selected. Material Requirements Planning will also close a contract if its expiration date has passed or the maximum quantity has been reached.

Advisory Messages

The shop calendar governs manufacturing orders. Sales, shipping, purchasing, and receiving are not limited to the shop calendar. If the due date for a manufacturing order is a non-shop calendar date, Finished Goods Planning moves the order to a date on the shop calendar.

When the start date of scheduled orders is the same the MRP run date, Material Requirements Planning prints the message Planned Order Due for Release.

Material Requirements Planning issues these messages wherever the program encounters a firm order that should be rescheduled:

Reschedule	Messages	Comments
Firm order	Move Order # IN (or OUT) to <date> Move P.O. # Line # IN (or OUT) to <date> Move planned order IN (or OUT) to <date>	Order number designates a released manufacturing order number or a purchase requisition number. PO number designates a purchase order number, and Line number is the corresponding purchase order line number. <date> is a shop calendar date.
Non-firm released order	Order # has been moved from <date> TO <date> Planned Order moved IN from (OUT to) <date>	The from and to dates are the old and new shop calendar dates, respectively.
Non-firm planned order	none
Orders or requisitions should be rescheduled to cover a past due requirement	Move Order # IN for Past Requirements Move Order # IN to <date> Move Planned Order IN for Past Requirements	The program cannot create planned orders or reschedule orders to cover past due requirements, because the due date of the requirement is not within MRP's planning horizon.

Note
If you enter a number of days for the MRP - move in message suppression and MRP - move out message suppression options in the System Options Maintenance (XM) (Manufacturing Options) program for your manufacturing branch, you limit the number of move in and move out messages. If you enter a number of days for the MRP - days order due for release option or leave the MRP - print order release message? option blank, you limit or exclude the "Planned order due for release" messages.

Standard Messages

The Demand exceeds supply message is skipped if all of these conditions are met:

The Create immediate supply order option in the System Options Maintenance (XM) program (Inventory Control Options) is set to Y or I.
The entry in the Item code field in the Enterprise Item Maintenance (IM) program matches the entry for the Immediate supply item code option in the System Options Maintenance (XM) program (Inventory Control Options).
The Make/Buy/Kit field in the Enterprise Item Maintenance (IM) program is set to M, and the item has a standard bill of material.
The demand is from a past due forecast.

Material Requirements Planning Report

The report that Material Requirements Planning outputs can be quite extensive. One way to save paper is to output it to a spooler, email, or PDF file.

If you do not erase work files, you can use QICLOOK™ or Report Generator on the MRP Exception Messages file to produce a very short report by planner sorted by message type. This enables you to target the most important messages for resolution.

Should you want to see the details of the plan, use the Planning Profile Maintenance (MPM) program to display accurate information as of the moment of inquiry because the program recalculates the gross requirements. A message that was necessary when the report was run may no longer be needed because circumstances may have changed.

The report includes this information for each item:

Item number and description
Product class selected in the Enterprise Item Maintenance (IM) program
Engineering Change Level set in the Current ECL field in the Branch Item Maintenance (IMB) program
Stocking unit of measure
Group on hand: Quantity in on hand inventory in branches in your inventory group
Safety stock: Quantity set in the Safety stock field in the Branch Item Maintenance (IMB) program
Manufacturing lead time entered in the Mfg LT field of the Branch Item Maintenance (IMB) program
ABC class entered in the Branch Item Maintenance (IMB) program
Planner: Selected for this item in the Branch Item Maintenance (IMB) program
Scrap percent entered in the Scrap % field in the Branch Item Maintenance (IMB) program
Branch on hand: Quantity in on hand inventory in your login branch
Lot size: Quantity set in the Lot size field in the Branch Item Maintenance (IMB) program
Order code: Selected in the Order code field in the Enterprise Item Maintenance (IM) program
Planning period code: Selected in the Planning period field in the Branch Item Maintenance (IMB) program or DFAULT if blank
Buyer: Selected for this item in the Branch Item Maintenance (IMB) program
Spread forecast: The number of days entered in the Spread forecast field of the Branch Item Maintenance (IMB) program
Quantity in floor stock
Minimum order quantity: Specified in the Min order qty field in the Branch Item Maintenance (IMB) program
Cushion: Number of days the current plan should be held firm, which you entered in the Cushion Program option in the Material Requirement Planning program
Item code: Entered in the Item code field in the Enterprise Item Maintenance (IM) program
Consignment: Quantity in consignment inventory
New forecast: Number of months entered in the Ext fcst by mo field in the Branch Item Maintenance (IMB) program
Maximum days to be covered by a single order from the Max plan period field of the Branch Item Maintenance (IMB) program
Standard unit cost

If you selected F (full planning report) or I (include a planning profile report only for those items that have exception messages) for the Select report type Program option, the report includes this information for each item:

Date: The start date of the period; the first period is always PAST DUE; ** Horizon date + Lead time
Days: The number of days in the period
Required: The quantity that have been committed for customer sales orders during the period
Available: Quantity on-hand + Floor stock + Quantity intransit - Obligated quantity - Safety stock + Planned and released orders - Other requirements - Forecast variance
Order qty: Quantity ordered on requisitions, purchase orders, manufacturing orders, or transfers not yet received into inventory
Demand order number
ECL: Engineering Change Level
Firm: F: This order cannot be rescheduled or canceled
Planned orders: Quantity on order that the system planned for the period

Exception messages: The messages that print depend on options set in the System Options Maintenance (XM) (Manufacturing Options) for your manufacturing branch or enterprise. These are example messages, some of which may be abbreviated on the report:

Cancel [order type] [order number] [line number]
Demand exceeds Supply
Move [order type] [order number] [line number] OUT to [date]
Move [order type] [order number] IN for Past Req
Move Pln Ord OUT to [date]
Move Pln Ord IN for Past Req
Pln Ord due for release
P/O [purchase order number] [line number] is in inspection
Total required, order quantity, and planned orders

If you selected E (generate a listing of all advisory messages for each item) for the Select report type Program option, the report includes this information for each item:

Date: The due date or date wanted for the order
Exception messages: The messages that print depend on options set in the System Options Maintenance (XM) (Manufacturing Options) for your manufacturing branch or enterprise. These are example messages:

Cancel [order type] [order number] [line number]
Demand exceeds Supply
Move [order type] [order number] [line number] OUT to [date]
Move [order type] [order number] IN for Past Req
Move Pln Ord OUT to [date]
Move Pln Ord IN for Past Req
Pln Ord due for release
P/O [purchase order number] [line number] is in inspection

If you selected the Pegging? Program option, Material Requirements Planning also prints the Requirements Pegging Report:

Due date
Requirement type: Customer order, Planned order, Released order, Unconsumed forecast, Transfer out, Safety stock, Requisition, Scrap allowance, Floating shortage
Required quantity and subtotal for this requirement type
Demand number and line or item number
ECL: Engineering Change Level
Supply order number
Firm:
F: This order cannot be rescheduled or canceled
X: This is a non-manufacturing requisition
Lead time: Order prep lead time + Manufacturing lead time
Demand type: S/O: Sales order
Supply type: MFG: Manufacturing order, P/O: Purchase order, REQ: Requisition
Total required

At the end of the report, this information appears:

Runtime exceptions if you selected S or L for the Select exception report type Program option. Runtime exceptions are also set to the E-mail for mfg order notification specified in System Options Maintenance - Manufacturing Options.
Start time, print time, and end time

Reprinting

If you select F (full) for the Select report type, you can subsequently reprint the report, using a different Select sort option as long as you did not select the Erase work files? Program option. For example, you may print the report sorted by planner code and then want to print the same report by product class.

** Reprint ** appears in the header of a reprint.