In this scenario, though there are on hand stock above the Order point and lead time is met, still Purchase requisitions are created in the system. There are reserved shop orders. Can anyone please explain the reason for creating the PR from Order proposal in this scenario. Any relation with Inventory part Planning?
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Planning Method B Order point: PR generates though there are On hand Stock
Best answer by Manoj Balasooriya
If the required date of the reserved shop materials is not a future date, the system reduces them from the on hand quantity resulting on hand quantity going below the order point. If the required date is a future date, the system won’t reduce the reserved quantity from the on hand quantity.
The starting point for the calculation is to look at the current quantity on-hand and any old supplies and demand that should have occurred up until today. The order proposal job is also looking at one lead time ahead into the future and it will only consider planned supplies (Purchase requisitions) when looking ahead (i.e., it will not look at future demands).
Now the on hand quantity after reducing reserved shop order materials is below the order point. And your planned supplies for the period one lead time ahead might be not enough to put the on hand quantity over the order point, hence PR is created.
If the required date of the reserved shop materials is not a future date, the system reduces them from the on hand quantity resulting on hand quantity going below the order point. If the required date is a future date, the system won’t reduce the reserved quantity from the on hand quantity.
The starting point for the calculation is to look at the current quantity on-hand and any old supplies and demand that should have occurred up until today. The order proposal job is also looking at one lead time ahead into the future and it will only consider planned supplies (Purchase requisitions) when looking ahead (i.e., it will not look at future demands).
Now the on hand quantity after reducing reserved shop order materials is below the order point. And your planned supplies for the period one lead time ahead might be not enough to put the on hand quantity over the order point, hence PR is created.
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