How to Calculate Material Requirement Planning – Techniques / Formula / Policy

I have received many queries from students and practitioners of materials requirement  planning that how to calculate MaterialsRequirement Planning (MRP). Here I am shortly given them advise to calculate the Materials Requirement Planning as per below formula, which will help you to calculate your objective results.

Required Quantity                  =  From bills of material

Consumption during lead time = ( ( 3 month required qty ) /90 ) x lead time                                                     

Safety stock                            = ( ( 3 month required qty ) /90 ) x Safety stock days

If Order Quantity to Specific Size :

Order Quantity = ( Material reqd / order size) = No. of lots rounded to higher side

Order Quantity =  No. of lots x  Lot size                          

If Order Quantity up-to certain level :

Order Quantity = Match Material required with min. order size , if  required size is higher then order else order min. order size

To detail working for an ERP system you’ll need to establish below pre-requisite policies to get the desire results of Materials Requirement Planning System.

Establish the following policies:

• Material Type.
• Material Min / Max Stock.
• Purchase Unit & Stock Unit
• Material Min / Max Order Size
• Material Purchase Local / Import
• Actual Supplier Lead Time Material wise.
• Material Classification.
• Material Categories Local / Import wise
• Material Order Size. Max order / Min Order Size

You can also understand the Materials detail in SAP Material Master Detail into this blog.