ATP/QOH Based Requirement Planning

We will use an illustration to explain how the following three Requirement Methods deal with shortages in the system.

PRODUCT ID | REQUIREMENT METHOD
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108941-5 Requirement For Order When ATP Reaches Minimum Stock For Product-Facility
108941-6 When ATP Reaches Minimum Stock For Product-Facility
108941-7 When QOH Reaches Minimum Stock For Product-Facility

This Sales Order has all the three items on it, with ATP having gone negative for two of them. All three have positive Quantity On Hand.

The following table shows the current scenario to be addressed

Available To Promise (ATP) = Order qty – QOH.

As can be seen, the net shortage for the three items – 108941-5 (-410), 108941-6 (-630) and 108941-7 (-60) is of 1,100 units. Shortage is computed as ATP + MOL. In the case of the first two, the shortage is above ROQ. However, in the case of the third, ROQ is higher. Therefore, MRP should create Requirement for 410, 630 and 150 units each respectively.

Let us run MRP and look at the results

As we can see, Requirements have been created for exactly these quantities.

*Note that Re-order Quantity (ROQ) is different from Economic Order Quantity, which is the optimum quantity to be ordered. Take ROQ as the minimum order quantity, but if the shortage is higher, Requirement has to be created for the shortage quantity