MRP calculation

Material Requirements Planning (MRP) is a modelling tool for procurement and production planners to create plans to meet demand for your purchased and manufactured items.

An MRP calculation request matches your supply of components, raw materials and stock items with current and future demand for your released and other items, to identify stock shortages, and to generate recommendations to satisfy these stock shortages.

When an MRP calculation request is completed a notification displays in the Notification centre. You can go straight to the MRP calculation result from the notification.

The MRP calculation results display in a simple list by company, site and item. For each result, you can analyse what to purchase and/or manufacture, by which date, and the type of demand that creates the anticipated production.

You can initiate your procurement or production processes directly from the suggested results, creating purchase orders and work orders quickly and easily with the direct links to Purchasing and Manufacturing. This is an effective way of ensuring suggested materials are available at the required times to fulfill your schedule.

You should regard MRP as an integral component of your stock management. By only ordering items when there is a requirement for them keeps stock levels and associated stock overhead costs to a minimum.

Request an MRP calculation

1. To request an MRP calculation, select Create from the main view or the split view.

2. In the MRP calculation request window, enter a Description. The description identifies the specific set of MRP calculation results.

   You could enter a description that reflects the purpose of the MRP calculation request, for example. This will help you identify the exact MRP calculation results set.

3. Enter your request criteria. You can request an MRP calculation for:

   • A Company or a production Site, but not both

     If you select a company, all sites for the parent company are included.

   • Multiple companies or multiple production sites, but not both

   • Manufactured and purchased items

     A single manufactured or purchased item, a range of items, or all manufactured and purchased items.

4. Leave or edit the Start date. You can request an MRP calculation from today or from any date in the future.

   If you leave the Start date as the current date, supply and demand that was due in the past is included in the MRP calculation because past dates are set to the MRP calculation request Start date.

5. Enter the number of full weeks to include in the MRP calculation forecast.

   You can leave this as the default 5 weeks from the Start date or you can enter the number of weeks to include in your forecast.

6. Select the Explode bill of material checkbox if you want the MRP calculation to create suggestions for the components of released items when stock of the released item is in shortage.

   When selected, the MRP calculation explodes work order suggestions for released items into requirements for its component items, according to the bill of material definition. It then processes its component requirements, together with any other supply and demand, to identify any stock shortages and create suggestions to satisfy those component item stock shortages.

7. You can optionally include sales orders at Quote status in the requirements calculations. Select the checkbox to include sales quotes.

8. To request the MRP calculation, select Calculate.

   To let you know that the MRP calculation is finished, a notification displays in the Notification centre. From the More actions menu in the notification, select Results to view the MRP calculation results set, or select a link from the notification to go to the Purchase order planning or Work order planning page.

   If a suggestion is being created on one of the planning pages, you need to wait until the order is created before Calculate requests the MRP calculation. Select Cancel from the message then try again.

9. You can request multiple MRP calculations from a single set of request criteria. To request additional MRP calculations, return to step 1.

   Change the description and any request criteria before you select Calculate.

Review the MRP results set

1. When the MRP calculation is completed, select the MRP calculation results set as follows:

   • Select the MRP calculation results set from the main view or the split view.
   • From the Notification centre, from the More actions menu, select Results.

   The MRP calculation result is grouped into weekly buckets per company, site and item.

   1 suggestion per requirement per weekly bucket is generated where the potential requirements exceed any supply of the item. The generated suggestions include an uplift to component quantities when a Scrap factor % is defined on the bill of material. Supply and demand transactions with a due date in the past are included in the calculation for the first weekly bucket.

   MRP is calculated as: (Total supply + Starting stock) – Total demand – Safety stock

   The date of the first requirement in the bucket is the Sunday of the appropriate weekly bucket.

   The suggested order Start date is from the calculated due date. Purchasing suggestions consider the item-site Purchase lead time; production suggestions consider the item-site Production lead time.

   See MRP calculation and examples for full details of the MRP calculation and a worked example.
2. Select an item name to analyse the MRP calculation results and view any demand and supply transaction documents.

3. If the MRP calculation result Status is:

   • Completed: You can create purchase orders from the generated suggestions to replenish stock from an external supplier and work orders to replenish stock from in-house production. If there are several suggestions for the same item, you can combine several of the recommendations together on the Purchase order planning and Work order planning pages. The item-site Preferred process determines if the Purchase lead time or Production lead time will be considered.
   • In progress: The MRP calculation is not yet complete. MRP is currently running the calculation request or the MRP calculation request was for a future date. You cannot create purchase or work orders.

Create a purchase order for an external supplier

1. Check the Suggestion status of the item to order is Suggestion.

   If the Suggestion status is Ordered, an order has already been created. Select a different suggestion.

2. To create a purchase order from the MRP suggestion, select the More actions icon then select Create purchase order. This action can be available from the More actions icon for a Purchasing and a Production suggestion.

3. The supplier name is displayed by default. You can change the Supplier.

   If the Supplier is blank you need to enter or select the supplier.

4. Leave the Purchase quantity of the Item.

   The Purchase quantity represents the order quantity that MRP has calculated produces the best schedule, subject to the specified item-site replenishment rules and MRP calculation request criteria.

5. Leave the Gross price for the Item.

   The Gross price is calculated automatically from the supplier prices if the Supplier name is displayed by default. You can increase or decrease the default price per unit.

   If the Gross price is zero or blank, enter the price per Stock unit for the item.

6. You can leave the remaining fields as the default values or you can enter your own values:

   • Order date: The default planned Order date is the MRP calculation request Start date.
   • Expected receipt date: The date that the item needs to be available to meet the demand.

7. Create the purchase order.

   The item and associated prices are loaded to the purchase order automatically. The purchase order Status is set to Draft. You can add attributes and dimensions, edit the order line and submit the purchase order for approval on the Purchase order page. Go to the Purchase order documentation for further information.

   The suggestion on the Purchase order planning page is deleted.

Create a work order for in-house production

1. Check the Suggestion status of the item to order is Suggestion.

   If the Suggestion status is Ordered, an order has already been created. Select a different suggestion.

2. To create a work order from the MRP suggestion, select the More actions icon then select Create work order. This action can be available from the More actions icon for a Production and a Purchasing suggestion.

3. Leave the Quantity to produce of the Released item.

   The Quantity represents the order quantity that MRP has calculated produces the best schedule, subject to the specified item-site replenishment rules and MRP calculation request criteria. You can increase or decrease the suggested order quantity.

4. The default planned production start date is the MRP calculation request Start date. You can enter or select a different date if production needs to start at a later date.

5. You can leave the remaining fields as the default values or you can enter your own values:

   • Category: The Category of work order to create.

   • Type: The work order Type. This also sets the initial status for the work order.

     If you leave the initial status of the work order as Planned, you cannot track progress for the work order.

     If you set the initial status of the work order as Firm, you can track production progress and component consumption for the work order.

   • Name: Enter the name commonly used at your production site for the Released item or leave the default value to use the Released item name.

   • Work order number: Leave the field blank to generate the next sequential work order number or enter your own work order reference.

     If you enter your own custom work order reference, it needs to be unique.

6. Create the work order.

   When you select Create, the Category determines whether the routing and/or the list of components required to produce the Released item are loaded to the work order automatically. On the Work order page, you can add attributes and dimensions, reserve stock for production, generate serial numbers for the planned production quantity, and print documents in PDF format for your workshop teams to use on the shop floor. Go to the Work order documentation for further information.

   The suggestion on the Work order planning page is deleted.

Calculation status: Error

In the main list, if the Status displays Error, select the line.

In the Error message field for the MRP calculation result is the reason the MRP calculation failed. You need to resolve the issue then request a new MRP calculation.

Example errors

Error message	Solution
ItemSite: Record not found: {"item":"#[Item ID]","site":"#[Site ID]"}	A specific demand or supply item does not exist at a named site. On the Item page, check the main list for the item ID. You need to add the item if it's missing. If the item ID exists, check the Sites tab for the site name. In the Item-sites grid, if the site is not listed you need to add the item-site data. If the site is listed, to confirm the site code is correct, from the More actions icon select Edit. If the site ID for the site name does not match that specified in the error message, you need to add the item-site data.
The operation failed because the record already exists.	This error is displayed if your Sage Distribution and Manufacturing Operations is not the current version. It is caused by a fault in the MRP calculation run which Sage has resolved.

Delete an MRP calculation result set

From the main list, you can delete one or multiple MRP calculation result sets.

To delete a specific MRP calculation result set, select the More actions icon then select Delete.

When you delete an MRP calculation result set, all suggestions on the Purchase order planning and Work order planning pages generated by the MRP calculation are deleted at the same time. When you select Delete, if a suggestion is being created as a purchase order, deletion is blocked.

Working with MRP calculations and results

Refer to the list of questions in this section for guidance on how to use your Sage Distribution and Manufacturing Operations solution to carry out day-to-day planning tasks.

• When should I request an MRP calculation?
• Is the MRP calculation single-company?
• Can I request an MRP calculation for a single production site if my organisation has multiple production sites?
• I want to request an MRP calculation for some of our production sites but not all of them. Can I do this?
• What constitutes demand for the MRP calculation?
• What constitutes supply for the MRP calculation?
• Does the MRP calculation analyse requirements for the levels in a bill of material?
• Does the MRP calculation nominate a preferred supplier for a suggested purchase order?
• What types of transactions does the MRP calculation ignore or exclude?
• How does MRP calculate when and what to purchase or manufacture to satisfy demand?
• A suggestion has been generated for an item that has not been ordered by a customer. Why?
• An item is being ignored by the MRP calculation, why?
• In the MRP calculation results set, there are several suggestions for the same item. Can I group the suggestions to reduce the number of orders to create?

When should I request an MRP calculation?

You can request an MRP calculation at any time. There are no strict rules. However, since an MRP calculation request can take up a considerable amount of processing power and time it's best to work out a procedure. Decide how often to request an MRP calculation by considering the following points:

• How much information is needed
• How often the information is needed
• How much of an overhead MRP is to run
• How frequently sales orders, work orders and purchase orders are processed, and stock levels change

You can request an MRP calculation at regular intervals:

• Daily: A daily request might not be worthwhile as the results might only differ slightly.

• Weekly: A weekly request could generate more useful results than a daily request.

  If you use a weekly production schedule you should request an MRP calculation at least weekly.

• Monthly: Requesting an MRP calculation on the same date each month could generate more useful results than a weekly request if demand is light.
• Yearly: Requesting an MRP calculation once a year is quite feasible.

You can request an MRP calculation in response to ad hoc changes, such as changes to the components of a bill of material.

As an MRP calculation request can take several hours to run, it's a good idea to run it overnight. Alternatively, you could run MRP over the weekend.

Is the MRP calculation single-company?

No. You can request an MRP calculation for a single company or for multiple companies. You can enter or select each company to include in the MRP calculation from a list of companies. The MRP calculation assesses the potential component requirements for the selected parent companies, including all sites for the parent companies. Note that you can request an MRP calculation for a single or multiple companies or for a single or multiple sites. You cannot request an MRP calculation for both a Company and a Site.

Can I request an MRP calculation for a single production site if my organisation has multiple production sites?

Yes. Leave the Company request criteria blank and enter or select a Site. The MRP calculation assesses the potential component requirements for the selected site only.

I want to request an MRP calculation for some of our production sites but not all of them. Can I do this?

Yes. Leave the Company request criteria blank. You can enter or select each production Site to include in the MRP calculation from a list of sites. The MRP calculation assesses the potential component requirements for all the selected sites.

What constitutes demand for the MRP calculation?

Demand comes from:

• Sales orders, sales quotes (optional), and any demand for components and raw materials
• The item-site Safety stock level

• Demand transactions with a due date in the past

  These are considered to be demand not delivered on the MRP calculation Start date.

The MRP calculation matches your supply of components, raw materials and stock items to the demand, and generates a suggestion where the potential requirements exceed any supply. The MRP calculation checks the Safety stock level at the end of each weekly bucket calculation. If the calculation takes the quantity of Accepted stock below the safety stock level for the week it generates a suggestion for the weekly bucket. If there is insufficient stock available, the MRP calculation generates:

• A Production suggestion if the item is manufactured and the item-site Preferred process is Production
• A Purchasing suggestion if the item is purchased and the item-site Preferred process is Purchasing

You can create a work order or purchase order as suggested directly from the MRP calculation result.

What constitutes supply for the MRP calculation?

Supply is used in the MRP calculation to work out whether current or future stock levels can meet demand from your sales orders, sales quotes, and any demand for components and raw materials. Supply is calculated from the following:

• Starting stock levels

  Accepted stock is calculated for each released item and component item-site record.

  Starting stock is calculated from the total quantity of Accepted stock on the MRP calculation request Start date.

  Supply and demand transactions with a due date in the past are also included in the starting stock level calculations. These are considered to be supplies not yet received and demand not yet delivered, both of which affect the starting stock on the start date of the calculation.

• Purchase orders
• Work orders

• Supply transactions with a due date in the past.

  These are considered to be supplies not received on the MRP calculation Start date.

Does the MRP calculation analyse requirements for the levels in a bill of material?

Yes. When the Explode bill of material checkbox is selected, MRP analyses the potential requirements for a released product needed for a work order, and for its components and raw materials, according to the bill of material definition. If the MRP calculations determine stock of the released item is in shortage, MRP processes its component requirements, together with any other supply and demand to determine if there are stock shortages for its component items as well. It then creates additional suggestions to satisfy the component item stock shortages.

Does the MRP calculation nominate a preferred supplier for a suggested purchase order?

Yes, if the item to order is listed as an item that the supplier provides.

If the supplier is the default supplier for the item, the supplier is nominated when creating the purchase order. You can change the nominated supplier to a different supplier.

If multiple suppliers supply the item, a supplier is nominated. You can change the nominated supplier to a different supplier.

If the Supplier records fail to nominate a supplier, you need to select the supplier manually when creating a purchase order from a generated suggestion.

What types of transactions does the MRP calculation ignore or exclude?

The MRP calculation ignores external sales forecasts and purchase requests. It ignores sales quotes if the option to include sales quotes is left clear in the request criteria. The MRP calculation also ignores items that are in the same item group as the demand item.

How does MRP calculate when and what to purchase or manufacture to satisfy demand?

See MRP calculation and examples for full details of the MRP calculation and worked examples.

A suggestion has been generated for an item that has not been ordered by a customer. Why?

The MRP calculation generates a suggestion where potential requirements exceed your supply of components, raw materials and stock items. As the MRP calculation also checks the Safety stock level at the end of each weekly bucket calculation it could have generated a suggestion because the quantity of Accepted stock fell below the safety stock level for the week. So although there appears to be no demand from a specific order, the suggestion could have been generated because there is insufficient stock of the item. If there is insufficient stock available to meet demand, the MRP calculation generates:

• A Production suggestion if the item is manufactured and the item-site Preferred process is Production.
• A Purchasing suggestion if the item is purchased and the item-site Preferred process is Purchasing.

An item is being ignored by the MRP calculation, why?

There are many factors that can prevent an item from being included in the MRP calculation.

• Check the following item-site data:

  • Replenishment method needs to be set to By MRP
  • Preferred process
  • Accepted stock level from inspection and quality control
  • Safety stock level

• Check if the Explode bill of material checkbox is selected.

  If the checkbox is selected, check the Lowest BOM level included in the MRP calculation. It could be that a component item you expected to be included in the MRP calculations is a component of a subassembly and the MRP calculations stopped at that subassembly because there was sufficient stock of that item. The MRP calculations process items from level 1, the released item, down through the subassembly and component levels in order.

  If the checkbox is clear, subassemblies, components and raw materials of a released item have been intentionally excluded from the MRP calculation.

• Resynchronise your bill of material data with MRP.

  Your data can be edited while MRP is being synchronised with the data type. If an MRP synchronisation completed before the data type edit completed, items could have been excluded from the MRP calculation.

In the MRP calculation results set, there are several suggestions for the same item. Can I group the suggestions to reduce the number of orders to create?

Yes.

• On the Purchase order planning page, you can group multiple purchasing suggestions for the same item from the same supplier onto a single purchase order.
• On the Work order planning page, you can group multiple suggestions for production of an item at the same production site onto a single work order.