Reordering point and saftey stock difference
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.
Shrinivas Gangoor replied
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Every time a material is withdrawn from the warehouse, the system checks whether this withdrawal has caused stock levels to fall below the reorder level.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