Do you know that MRP will not create decrease (L type) messages for an item with the order policy code - 4. Ever wondered why?

 

Order Policy Code 4 was designed to be used with high-use/low-cost items, that have stable demand.  Periods of Supply is also used for longer lead-time items for which the user is not concerned about carrying excess inventory.

 

The Period of supply horizon is constantly moving as demand dates and quantities fluctuate and the point where demand/stock is unsatisfied, can get pushed backward or moved forward, resulting in action messages.  MRP will not suggest Decrease messages.  The only supported action messages, then are Expedite, Defer, Cancel and Increase messages.  In the case where demand increases, G increase messages will be  created for Firm unfrozen Orders that can satisfy the the unmet demand.

 

The Period of Supply horizon is only applicable to planned orders(PLO), i.e. MRP looks to the next unsatisfied demand point and counts out the Value Order Policy (VOP) days taking into consideration firm orders inside the VOP, and suggests any necessary PLOs.

 

If an item has an Order Policy Code (OPC) of 4, MRP will generate a order message for either a work order or purchase order using the days entered in the Order Policy Value field (OPV).

 

An order that is created by MRP for a Period of Supply part is usually for a quantity more than is necessary on the required date. If decrease messages were created for a period of supply part a subsequent MRP run with an effective date of before the required date of the order would give an unnecessary Decrease (D) message. It would tell you to decrease the size of the order that it originally ordered for the period in question.

 

For more information on Setup, Use of Period of Supply Functionality , please review the below KM Docs:

  • Periods of Supply Logic - Order Policy Code 4 (Doc ID 853361.1)
  • MRP Order Policy Code and Item Branch Quantities in the Planning System (P41026) (Doc ID 627236.1)