Reorder point is calculated based on the safety stock, RLT(Replenishment lead time)...It is mainly calculated in order to maintain the constant level of stock in the plant...Safety stock is the stock which is normally req. to over come the delayed deliveries...
If the stock falls below the reorder point, based on the lot size, the procurement is triggered...
Hope it helps..
system runs like this..
u maintain the ROP in material master...
when GRn and GI's are done ur ROP will get effected...
similarly if the qty reaches below safety level, we have to run the MD01/MD04(or else u can run the program in background, giving batch run) which will automatically counts and generates PR/Po's
for calculating ROP, system checks the stock, all the open PO's, PR, and Planned. orders
see..u will fix the levels..
safety, re-order level .. etc,.. this will remain constent..
means say if u have mention ROP as 100, system will not change..
but calculates the stock, PO, PR..etc(say total 80qty), if 100 is not there it will generate the differance qty as PR/Planned order(100-80 = 20)
ROP is calculated for the first time based on the forecasting values you enter in the MMR.(consumption values).
Based on the safety stock(service level will decide safety stock)+external reuirements and planning file entry it will be decided in the periods to come in the future..
Just read the notes from sap library below..
Automatic Reorder Point Planning
In automatic reorder point planning, both the reorder level and the safety stock level are determined by the integrated forecasting program.
The system uses past consumption data (historical data) to forecast future requirements. The system then uses these forecast values to calculate the reorder level and the safety stock level, taking the service level, which is specified by the MRP controller, and the material's replenishment lead time into account, and transfers them to the material master.
Since the forecast is carried out at regular intervals, the reorder level and the safety stock level are continually adapted to the current consumption and delivery situation. This means that a contribution is made towards keeping stock levels low
Edited by: deepak k b on Dec 23, 2008 6:47 AM