MRP calculation justification

Make and buy recommendations can be generated, and suggestions created for work orders and purchase orders when you run an MRP calculation request. The MRP calculation result advises when and what to purchase or manufacture to satisfy the demand determined when the MRP calculations are run.

You can use this page to analyse what to purchase and/or manufacture, by which date, and the type of demand that creates any anticipated production. The results show the demand and supply over a specified time span, the orders that are causing the demand and those providing the supply.

As you can use the recommendations produced by the MRP calculations to place orders, you could use the information in this page to consider where adjustments might usefully be made to the generated suggestions. Such as where significant demand is anticipated soon after the MRP calculation forecast dates.

Analyse the MRP calculation results

1. Select the MRP calculation result set from the main view or the split view.

   The MRP calculation result is grouped by company, site and item.

2. Select an item name to analyse the MRP calculation results and view any demand transaction documents.

   Where the list of transactions and suggestions show a suggestion has been generated, the generated suggestion includes 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

   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.
3. View the generated suggestions on the MRP calculation page.

Working with MRP calculations

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.

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

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 for the MRP calculation request, 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.

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.

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.