# Planning with reorder point (fixed reorder quantity)

I am a former user of Navision 2.6 where I used reorder point planning. The logic is that if you calculate well the reorder point the stock will last enough until the next delivery form the supplier arrives. You only need to know when to place the order, that is when you cross the reorder point, placing a foward planned order. Then you do not need to receive any messages unless the system detects that the safety stock level will be crossed. Only then the system should propose a backward planned order. This should happen only if the safety stock level is crossed, otherwise useless messages could be received because we have stock and we already have an expected receipt in place.

In Navision 4.0 things work in a different way. Let us say it is January 1 and you place an order with scheduled delivery for April 1 because lead time is one month and the reorder point will be crossed on March 1. If you get a tiny sales order (that in practical terms will be honored with the stock at hand) for delivery on February 15, Navision will display a proposal to reschedule in the purchase order even if the safety stock level is far from being reached.

I would like to know if anyone else that uses reorder point for planning purposes has found the same results and in that case how can planning be handled.

Can you tell me the settings you are using in your example.

You have stock of “v” and a safety stock of “w”. Sometime prior to Jan 1 an order has been placed for “x” that breaks the reorder on March 1 and as you say you are due a receipt on April 1 for quantity of “y”. You then receive a sales order for “z” on Feb 15

So my question is - what are v, w, x, y and z?

Hello, For the finished product (let us call it AA), we have safety stock = reorder point = zero. We plan lot-for-lot. For the component (let us call it A) that we plan with reorder point = 200, safety stock = 0. We have a stock of 200 and we will comume some units in March 1. Thus, a forward planned purchase order 1000 units is proposed (because 1000 is the min. purchase quantity) to be delivered on April 1. We realease the order. Then, we need more units of A on February 15, and there is a message to rescheule in the purchase order

I thought you were fixed order? Can you confirm which reordering policy you set the items too as you have contradicted the title of the post to this last posting, and naturally they work differently.

That said ultimately the system MUST replan in the scenario you described. You have NO free stock as the stock level is on the reorder point. The planning is done from the reorder point breaking, allowing your natural usage to consume the interim stock prior to the replenishment order coming in. All you are doing with the smaller released order is bringing in the breakage point of the reoder point, and therefore the system HAS to suggest a replan. You cannot really fault the system for the calculation here, what if the smaller order breaking the reorder point took 199, by your request you would not want the system to pull the purchase order in. The only way it would not do this is if the scenario did not break the reorder point, so you have stock of 220 instead of 200 and the small order is for 15, in this case the small order would not take inventory below the reorder point of 200 and the original plan would remain.

In order to manage a reorder point the Reordering policy for item A (the component) is “Fixed Reordering Quantity”. Only that policy and “Fixed Quantity” are the ones that allow to activate the field Reorder Point. For item AA (teh product we asseble to order) the policiy is “lot-for-lot”. This may have caused the confusion.

Regarding the logic of MRP, you find it normal that Nav 4.0 reschedules in purchase orders if the time when stock goes below Reorder point level is earlier than the starting date of the order. We have been using Nav. 2.6 for six years and this was not the case. And for our planner it is a lot simpler if there was no rescheduling message from MRP. The important issue with reordering point policy for us is to be alerted by the system when to place the order. Once the order is placed we assume there is enough stock to manage any incoming orders unless the the stock goes below safety stock. Consider that the reorder point is just a “trigger point” and you already are covered with stock. If the time of the trigger moves that is not so much important for us because anyway we have the stock.