How does the ERP System calculates the MRP?
Calculation of the MRP in the ERP system is normally a highly sophisticated algorithm that combines many ERP parameters like such product properties, customer order properties, customer properties, supplier properties, capacities and and and.
But the Principe is supposed to be the same and includes the following elements in the supply chain:
[Forecast Inventory (FI)] = ([Available Stock Level] + [Planned Entrances]) – ([Minimum Stock Requirements]+[Planned Issues])
The Procurement Side of the ERP System
Procurement refers to the ERP activities of obtaining or procuring the materials needed to cover the requirements in the ERP system. In our form they
Available Stock Level (ASL) – How much stock the organisation has available for delivery to the customer or for use for producing the product. The MRP considers stocks of finished products, semi-finished products, raw materials and and standard products (like screws or adhesives). But (!!!)
These type of products will be considered through the MRP only if they are included in the bill of Materials of the product or there are minimum stock levels defined for those parts.
Planned Entrances (PE) – How much is planned to enter into the stock:
- Running Production orders
- Planned production orders
- Production proposals
- Planned purchase orders
- Running purchase orders
- Purchase proposals.
The Requirements Side of the ERP System
Minimum Stock Requirements (MSR) – for each product out of the product category that are stock managed some minimum stock levels are defined (normally on the product master data). These stock levels are considered as requirements.
Planned Issues (PI) – How much is needed to be issued – Deliveries to customers, sales forecasts, running production orders that require materials, planned production orders that require materials, production suggestions that require materials.
So:
[FI] = ([ASL] + [PE]) – ([MSR]+[PI])
The output of the MRP calculation is a list of the expected procurement required to cover the requirements. And it will be published pro product.
Comments are closed.