MRP works out what is short, when, and by how much, and proposes procurement to cover it. It is the heart of PP and one of the things SAP does best.
What MRP is calculating
Stock on hand
+ Planned receipts (purchase orders, production orders, planned orders)
- Planned issues (sales orders, dependent requirements, forecast)
- Safety stock
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= Available quantity (negative means a shortage)Where a shortage appears, MRP proposes coverage: a planned order for in-house production, a purchase requisition for external procurement.
For anything planned in-house it then explodes the BOM to create dependent requirements for the components, repeating in low-level-code order until the lowest level is reached.
MRP types
| Type | Method | Behaviour | Suited to |
|---|---|---|---|
| PD | Requirements planning | Calculate requirements and propose coverage | Key components and products |
| VB | Manual reorder point | Order when stock drops below a set level | Standard parts, consumables |
| VM | Automatic reorder point | The system calculates the reorder point | Stable demand |
| VV | Forecast based | Plan from forecast of past consumption | Seasonal demand |
| ND | No planning | Excluded from MRP | Procured per order |
Not everything needs PD. Screws and washers are perfectly well handled by a reorder point. The choice trades planning effort against inventory risk.
Lot sizing
| Procedure | Behaviour | Characteristic |
|---|---|---|
| EX (lot for lot) | Cover exactly the shortage | Minimum stock, maximum orders |
| FX (fixed) | Always a fixed quantity | Where the production lot is fixed |
| HB (replenish to maximum) | Fill up to a maximum level | Shelf-filling |
| TB (period lot size) | Group requirements over a period | Fewer orders |
Running MRP
| Code | Content |
|---|---|
| MD01 | MRP for a whole plant |
| MD02 | Single material, multi-level |
| MD03 | Single material, single level |
| MD04 | Stock/requirements list, live |
| MD05 | MRP list, a snapshot from the last run |
| MD07 | Collective stock/requirements display |
Converting planned orders
A planned order is a proposal, not a commitment. Converting it to a production order is what starts manufacturing.
Planned orders can be firmed so that subsequent MRP runs do not change their quantity or dates, which stabilises the near-term plan. A planning time fence automatically firms everything inside a defined horizon, preventing the immediate schedule from moving daily.