MM / P2Pintermediate

MM MRP Part 3: MRP Types, Lot Sizing, Safety Stock and Reorder Point

Key takeaway

Choose planning procedures per material: MRP types (PD MRP, VB/VM reorder point, VV forecast, ND no planning), lot-sizing procedures (EX, FX, HB, WB/MB periodic), rounding and minimum lot size, safety stock and range of coverage — and their effects on inventory and service level.

Explanation

📌 KEY POINTS
✅ PD: deterministic MRP from requirements; VB/VM: reorder point (manual/automatic); VV: forecast-based; ND: no planning.
✅ Lot sizes: EX exact, FX fixed, HB replenish to maximum, WB/MB weekly/monthly periods.
✅ Rounding value and minimum lot size shape proposals to supplier packaging and terms.
✅ Safety stock buffers uncertainty; reorder point triggers replenishment when stock falls below it.
⚠️ One setting for all materials leads to overstock of cheap items and shortages of critical ones.

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▶ WHERE WE ARE
Part 2 covered MRP Live. Now planning parameters.

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▶ 1. MRP TYPES

PD, VB, VM, VV, ND; choose by demand pattern.

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▶ 2. LOT SIZING

Static (EX, FX, HB), periodic (WB, MB), optimum (per config).

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▶ 3. ROUNDING AND LIMITS

Rounding value, minimum and maximum lot size.

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▶ 4. SAFETY STOCK

Fixed safety stock or range of coverage profile.

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▶ 5. SEGMENTATION

ABC/XYZ classification to assign parameters.

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▶ STEP BY STEP

Classify materials by value and variability.
Assign MRP types and lot sizes per class.
Set safety stock/reorder points.
Review results monthly.

✅ CHECKPOINT: planning parameters are assigned by segment, not by default.

Code example

ABAP Code

===== STEP 1: examples =====A-class, regular demand: PD + EX or WB, low safety stockC-class, stable consumption: VM reorder point, HB replenish to maxSpare parts: VB manual reorder point | not planned: ND ===== STEP 2: lot size details =====EX 90 → rounding 50 → proposal 100 | FX 1,000 | HB to max stock 500 ===== STEP 3: safety stock =====MRP2: safety stock 50 | or range of coverage profile (days of demand)

Real project scenario

Buyers kept reducing MRP requisitions because FX lot sizes of 1,000 were set for all packaging materials. After ABC/XYZ segmentation, packaging moved to EX with rounding to pallet size and reorder point for C-items, cutting inventory 20% without shortages.

Common mistakes

One parameter set for all.
Fixed lot sizes without reason.
No rounding to packaging.
Safety stock never reviewed.
Reorder points not updated.

Best practices

Segment materials.
Align lot sizes with supplier terms.
Review safety stock periodically.
Use automatic reorder point where suitable.
Monitor service and inventory KPIs.

Interview angle

Questions: "Which MRP types exist?", "EX vs FX vs HB?", "What does safety stock do?"
Strong answer: MRP types by demand pattern, lot sizes, rounding/limits, safety stock and reorder point, segmentation.

Practice this lesson

Quick check

1. Buyers keep reducing MRP requisitions because quantities are too large. Which parameter is most likely wrong?

2. A planner wants stock to be replenished only after it falls below a defined threshold, using historical consumption to set that threshold. Which MRP type combination best fits this requirement?

3. What is the main purpose of maintaining safety stock on the MRP view of a material master record?

Interview questions

1. Inventory is high for cheap items and shortages occur for critical ones. How do you set MRP types and lot sizes?

Answer it in your own words first, then compare.

2. What are the most important design decisions, trade-offs, and best practices in Material Requirements Planning?