10 Replies Latest reply: May 23, 2009 12:16 PM by sri devi RSS

Reordering point and saftey stock difference

sri devi
Currently Being Moderated

HI Experts,

can any body tell me the difference between reordering point and saftey stock?

which one should be maintained in the material master?

what will be the effect of each one and where ?

If we maintain both what will be the effect in the MD03 transaction.

 

Inputs are greatly appriciated.

 

Regards,

Sri.........

  • Re: Reordering point and saftey stock difference
    Shrinivas Gangoor
    Currently Being Moderated

    Safety stock:  The quantity of stock to satisfy high requirements in the stocking-up period.

     

    The purpose of the safety stock is to prevent material shortage.

    To determine the safety stock level, you must specify the risk of a material shortage and the desired service level. Safety stock is not used in production.

     

    The safety stock exists to cover both excess material consumption within the replenishment lead time and any additional requirements that may occur due to delivery delays.

     

    The safety stock is included in the reorder level.

     

     

    Reorder level: If the stock falls below this level , the system flags the material for requirements planning by creating a planning file entry.based on the configuration.

     

    In reorder point planning, an entry is only created in the planning file and the net requirements calculation is only carried out if stock levels fall below the reorder point

     

     

    In reorder point planning,

    The net requirements calculation is only carried out once the stock level has fallen below the reorder level.[ You we set an MRP type for the material in the MRP Type field in the material master (View MRP 1) to Reorder point planning, for example VB or VM.]

     

    The reorder point is important only for reorder point planning.

     

     

    Every time a material is withdrawn from the warehouse, the system checks whether this withdrawal has caused stock levels to fall below the reorder level. If this is the case, the system makes an entry in the planning file for the next planning run

     

    .With regards

    Shrinivas Gangoor

  • Re: Reordering point and saftey stock difference
    ramachandran subramanian
    Currently Being Moderated

    HI,

     

    Reorder Point:(ROP)

     

    If the stock falls below this quantity, the system flags the material for requirements planning by creating a planning file entry. PR will be created for the differece between reorder qty and current stock.

    ROP can be manually entered or automatically calculated

     

    Safety stock:

     

    Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period.

    The risk of shortfalls is reduced by having a safety stock.

     

    With manual reorder point planning, you can enter a value in the material master record. However, it is merely for information that stock has reached safety stock so that you can replenish stock.

     

    Both can be maintained in material master. In consumption based planning safety stock is inclusive of ROP.

     

    REgards

     

    Ram

    • Re: Reordering point and saftey stock difference
      sri devi
      Currently Being Moderated

      Hi Ram,

      Thanks for your inputs,

      can u clarify  me a scenario like....

      i maintain reorder point as 100 and 50 as safety stock  the material stock is 20. then whenn i run MRP what will happen

      • Re: Reordering point and saftey stock difference
        Shrinivas Gangoor
        Currently Being Moderated

        Hi,sridevi

         

        when you are working with reorder level planing -Saftey stock is just a Information.

         

        where as For working with reorder level planning.

         

        In materials planning, the maximum stock level is used only if you have chosen Replenish to maximum stock level as the lot-sizing procedure; that is, you have entered HB as the lot size key.

         

        we need to entr the Value for Maximum Stockif you have chosen Replenish to maximum stock level as the lot-sizing procedure.

         

        then System calculated when MRP generated -considering the Maximum stock ,Available  plant stock, and reorder point System through the Subsequent orders.

         

        In your case -100 is the reorder point  ,Maximum stock-You need to maitain example -if maitain 200  and plant stock in MMBE  is 50  then when you execute the MRP system will generate PR  for 150 qty.

         

        For working with Reorderlevel  all the Masterdata has to maitain in MRP1-View only.

         

        If you are creating a material master record, you must always enter the reorder point manually, even if it is later overwritten by the system

         

        And Maximum stock is -Quantity of the material in this plant that may not be exceeded.

        Use

         

        So like various C and B catogory  materials Company wants to use CBP  with reorder level planning and

        Based on the Past consumptions they maitain Material Requirements as -Reorder level qty, Max quantity which they want to stockit  so that System will generate the PR when it falls below the reorder level.

         

        I think you are clear now

         

        with regards

        Shrinivas gangoor

         

        Edited by: Shrinivas Gangoor on May 22, 2009 5:32 PM

  • Re: Reordering point and saftey stock difference
    Pardeep Malik
    Currently Being Moderated

    Hi,

     

    The reorder point procedure is based on a comparison between the warehouse stock and

    the reorder point. If the available warehouse stock is less than the reorder point, the

    system initiates requirements calculation.

     

    1. The reorder point comprises the expected average material requirements during the

    replenishment lead time and the safety stock. The following values have to be taken into

    account when the reorder point is defined:

    A.   The safety stock.

    B.   Prior consumption or future requirements.

    C.   The replenishment lead time.

     

     

    2.  The safety stock is used to cover unplanned excess consumption during the replenishment

    lead time and additional requirements in the case of delivery hold-ups.

     

     

     

    This may help u !

     

    Regards,

     

    Pardeep Malik

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