Reordering point and saftey stock difference

[Former Member]

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.........

[Former Member · Accepted solution]

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Every time a material is withdrawn from the warehouse, the system checks whether this withdrawal has caused stock levels to fall below the reorder level.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

[Former Member · Accepted solution]

Hi Shrinivas,

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.

[Former Member · Accepted solution]

Hi

the sytem will generate requisitions or planned order for Max stock level that is 50.

your reorder point will never be used by MRP as your maximum stock is less than reorder point.

Reorder point should always be less than maximum stock.

Thanks & Regards

Kishore

[Former Member · Accepted solution]

Hi Kishore,

u mean to say is safety stock should always greater than reordering point.If maintain only one reordering point what will happen, can i run MRP with reordering point .can u explain me with an example.

kindly tell me about planning file entry and how it will be generated and display T-Codes.

Thanks in Advanceee

Sri.........

[pardeep_malik]

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

[Former Member]

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

[Former Member]

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

[Former Member]

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

[Former Member]

Hi Shriniwas,

So do i need to maintain the both the values for reordering point and safety stock.please suggest me since our business scenario is very limited and no production of material only trading..

Regarding,

Sri...........

[Former Member]

Hi,

here the link to an explanation.

http://help.sap.com/saphelp_erp60_sp/helpdata/en/7d/c2821c454011d182b40000e829fbfe/frameset.htm

regards, Paul.