1. MRP: Material Resource Planning
Contents:
MRP Fundamentals
MRP Wizard

2. MRP: Unit Objectives
At the conclusion of this unit, you will be able to:
Describe the complete MRP Process in SAP Business One
Manage sales forecasts in the system
Use the MRP wizard
Display the list of all MRP recommendations with the order recommendation report

3. MRP: Business Scenario
You are selling items that have to be produced and other items that have to be purchased.
You do not always have enough of them in stock. However, you want to make sure that you can serve your customer’s needs as often and as fast as possible. For this reason, you have to plan ahead.
You want to be able to react quickly. On one side, you need to create sales forecasts while on the other side, you need to see what your stock, receipts, and requirements looks like.
You want the system to make recommendations about how you should react to different situations concerning various items.

4. MRP Fundamentals: Topic Objectives
At the conclusion of this topic, you will be able to:
Describe the fundamentals of MRP such as the bill of materials processing, the lead time, and the item master planning data

5. MRP Overview before MRP-run: Material Requirements Planning
stock / receipts
Purchase
Order
30 pcs.
before MRP-run:
this is the current
inventory status and
planned forecasts for
a purchased item.
Stock
20 pcs.
time
Sales
Forecast
30 pcs.
Sales
Order
40 pcs.
Sales
Forecast
50 pcs.
requirements
Material Requirements Planning
stock / receipts
Purchase
Order
30 pcs.
after MRP-run:
the MRP-run creates
recommendations for
purchase orders (P.O.*)
to be able to fulfill the requirements.
Stock
20 pcs.
P.O. *)
20 pcs.
P.O. *)
20 pcs.
P.O. *)
30 pcs.
time
Sales
Order
40 pcs.
Sales
Forecast
50 pcs.
Sales
Forecast
30 pcs.
The Material Requirements Planning (MRP) enables you to plan material requirements for the future. Generally the MRP creates recommendations for purchase orders for purchased items and recommendations for production orders for produced items to be able to fulfill the requirements.
MRP considers the existing stock, sales forecasts and the existing purchase and production orders.
The example in the graphic above:
Before MRP run, there are 20 pieces of a purchased item in stock. Additionally there will be receipts for 30 pieces from an existing purchase order. The requirements are 40 pieces, which will be needed for an existing sales order. It is planned from the sales forecasts that 50 pieces and at a later time 30 pieces will be needed.
After MRP run, recommendations for purchase orders have been generated to fulfill the requirements. MRP considered the existing stock, existing purchase orders, production orders, and sales forecasts.
In the item master record you use the Procurement Method field on the Planning Data tab to define whether an item is a produced item (Make) or a purchased item (Buy).
requirements

6. MRP BOM Processing before MRP-run: Skateboard Board Wheels Axis 1 pc.
There is a requirement for 10 skateboards from a sales order.
The skateboard is a produced item.
The board, the wheels and the axis are purchased items.
Skateboard
Board
1 pc.
Wheels
4 pcs.
Axis
2 pcs.
Sales Order
Skateboard
10 pcs.
Material Requirements Planning
after MRP-run:
The MRP creates
recommendations for a production order for the skateboard and recommendations for
purchase orders for all the purchased items.
Production Order
Skateboard
10 pcs.
Purchase Order
Boards
10 pcs.
Purchase Order
Wheels
40 pcs.
Purchase Order
Axis
20 pcs.
MRP generates requirements for the highest Bill of Material levels according to sales orders and forecast demands. Furthermore, it calculates requirements of the lower Bill of Material levels according to demands through the Bill of Material "explosion.“

7. MRP Lead Time Skateboard Board Wheels Axis
Lead Time: 10 days
Board
Wheels
Axis
Sales Order
Skateboard
Delivery Date:
Material Requirements Planning
Purchase Orders
boards, wheels, axis
Production Order
Skateboard
stock / receipts
time
10 working days
16.11.
30.11.
You maintain the Lead Time in the item master record on the Planning data tab. This is the number of days to calculate how long it takes to produce an item.
In this graphic, it takes 10 days to produce the skateboard. The lead time is 10 days. That means, that the board, the wheels and the axis have to be available 10 working days before the skateboard is due.
There is a sales order with the delivery date: The MRP planning is scheduling backward from on, considering the weekend with non working days. This results in MRP requirements for the components of the skateboard (the boards, wheels and axis). There are recommendations for purchase orders, so that they get purchased and will be available by
You can choose in the MRP scenario details, if the non working days should be considered:
Field: Consider Holiday Table for Production Planning: Select to define whether to consider holidays and weekends for production purposes. The holidays are defined in the Holidays Details window under Administration  System Initialization  Company Details. The number of holidays and weekends increases the lead time interval for the MRP calculations
MRP Requirements
boards, wheels, axis
Sales Order
Skateboard
requirements

8. Item Master: Planning Data
Item Master Data
Item Number P1001
Description Skateboard …
Planning Data
Planning Method MRP / None
Procurement Method Make / Buy
Order Interval Weekly / Monthly / …
Order Multiple 12
Minimum Order Qty. 10,00
Lead Time 10 Days
In the Item Master Record there are several fields with MRP-related data on the Planning Data tab:
Planning Method MRP: to plan the item procurement with the MRP system. None: the item procurement is not planned and no production order and purchase order recommendations are created for the item.
Procurement Method Make: to generate production order recommendations for the item. Buy: to generate purchase order recommendations for the item.
Order Interval: Choose one of the values to define time intervals between different orders. You can also choose Define New to open Define Order Intervals and to enter a name and frequency for the interval.
Order Multiple: Enter the numeric value to define the size of the lots for the MRP. For example, if the value is 12, order the item in multiple of 12. So if you need 20 items and the value is 12, you have to order 24 items.
Minimum Order Quantity: Enter the value to define the minimum lot size.
Lead Time: Enter the number of days to calculate the duration of time to produce or receive a product.
You can also define the planning data in the Item group (Administration  Setup  Inventory  Item Groups). This information copies automatically to the item master data by default.

9. Forecasts
Item Skateboard Start Date EndDate View monthly
stock / receipts
01.09.
01.10.
01.11.
31.12.
01.12.
time
Sales Forecast
Skateboard
50 pcs.
Sales Forecast
Skateboard
40 pcs.
Sales Forecast
Skateboard
20 pcs.
Sales Forecast
Skateboard
60 pcs.
requirements
You create forecasts to plan purchase and production in advance, even before you receive actual sales orders. SAP Business One uses the forecasts information in the MRP run as an additional source for the requirements. You may receive sales orders in short notice, however the lead time to manufacture the product is long in most cases. Therefore, you produce the product for the forecast and when the actual sales orders arrive, you are able to supply the goods even in short notice.
You can also define in the General Settings that sales forecasts are consumed by actual sales orders. Administration  System Initialization  General Settings  Inventory  Planning
You maintain the forecasts per item.
Enter the Start and End date to define the forecast horizon. The current date displays by default. You can update the field after you save the forecast.
You manage forecasts on daily, weekly, or monthly basis. When you create a new forecast, select the appropriate view. You cannot change the view once you have saved the forecast.
In addition, you can create several forecasts. However, you select only one forecast for each MRP scenario.

10. Input Output MRP Input / Output Inventory Forecast Parent Sales
Order / AR Reserve Invoice
Parent
Production
Order
Planning
Data from Item Master
Purchase
Order / AP Reserve Invoice
Parent
Dependant
Requirement
Bill of
Material
Material Requirements Planning
Output
Production
Order
Purchase
Order
The data that you can enter as input for the data source for Material Requirements Planning in SAP Business One can come from:
Open purchase orders and AP reserve invoices as expected receipts.
Open sales orders and AR reserve invoices as requirements.
Defined forecasts as an additional requirement.
Inventory: existing stock per warehouse of an item and the minimum stock level in the item master data.
Open production orders for parent items as expected receipts.
Parent dependant requirements: these are requirements for child items of a parent item, which get created depending on the bill of material of a parent item.
Planning data: the data coming from the item master record, which is maintained on the planning tab of the item master record.
Bill of material: information about the parent item and the quantity of child items.
The data that you get as output from the Material Requirements Planning in SAP Business One are recommendations for production orders and purchase orders, depending on the procurement method maintained in the item master record.

11. MRP Wizard: Topic Objectives
At the conclusion of this topic, you will be able to:
Work with MRP wizard
Run MRP in the SAP Business One system

12. MRP Wizard Process MRP Wizard Step 1 Step 2 Step 3 Step 4 MRP Scenario
Scenario Details
Data Source
MRP Results
create a new or
select an
existing
scenario
define the planning
horizon
and
the items
define the
data source
Item
Initial Stock
Receipts
Gross Requirements
Final Stock
MRP-
Run
Existing Stock
Purchase Orders
Sales Orders
Production Orders
Minimum Stock Level
Forecast
Warehouses
Scenario Description
Simulation
Planning Horizon
Items
Display Preferences
MRP Scenario Name Description
Order Recommen-
dation Report
Purchase Orders
Production Orders
The MRP Wizard guides you through a 4-step process of defining new MRP scenarios and analyzing the MRP results. The MRP results are presented on screen or in a report.
Step 1: SAP Business One enables you to create a new MRP scenario or to choose an existing one. For a new scenario, enter its name and description. As for the existing one, select a scenario from the list.
Step 2: The next window in the wizard is Scenario Details. In that window, you define the parameters for your scenario, such as Planning Horizon and Item Details. You can choose Simulation if you only want to simulate a MRP scenario. In this case you would not be able to save or release recommendations. Lastly, you choose your display preferences.
Step 3: Furthermore, you display the Data Source window. In this window, you define the criteria that you want to consider in your MRP scenario. For example, you define whether you want to consider the existing stock, or analyze the minimum stock level. You can also include the predefined forecast. Display the forecast to view what items and quantities it includes. At this point, decide whether to save the scenario or to run it.
Step 4: Once you have decided to run the scenario, you end at the MRP Results window. Use the window to analyze the MRP results. You can display the final stock quantity before the MRP run or after it. Choose View Recommendations to display another view of what has to be produced and what has to be ordered.
The Order Recommendation Report enables you to see which items have to be purchased or produced. You can create the purchase or production orders from the report.

13. MRP Results MRP Results click
Planning Horizon Display after MRP
# Item No Past…
1 P
Initial Stock
Receipts
Gross
Requirements 10
click
Final Stock
dead periods
Pegging Information – P1001
Item Code P1001
Source Type Due Date Quantity
Sales Order
Display after MRP: Select to display data after the MRP run. Otherwise, displays the situation without considering new planned quantities before the MRP run.
You end up at the MRP Results window when you run the MRP scenario. The window represents master schedule for the requirements.
The window displays a row for every item and for every date that is defined in the planning horizon. You can expand each item row into four composing rows. Each row contains the record that served for the calculation of the quantities in the item row before and after you have applied MRP recommendations. These records are the initial stock in each period, stock receipts during each period, requirements for stock issues during each period, and final stock or net requirements in each period.
The data on the window is visualized: Pale gray or inactive cells define periods where no activity takes place. Dark gray cells define dead periods, where if a requirement exists, its lead time is too long to permit timely procurement. The value in such cells appear in red and indicate that the item has extended or extends its due date. It also gives an indication that the item needs to be expedited to make that due date. Light yellow cells indicate an active period when either receipts, or gross requirements take place.
To display Pegging Information, choose quantity either in the receipts row, or the gross requirements composing row.
In this window, you view the source of the receipts or the gross requirements for the selected period or item. Each receipt or gross requirement displays on a separate line.
The source of the receipts is open purchase or production orders. The source of the gross requirements is open production orders, sales orders, forecast, or MRP requirement.

14. Order Recommendation Report
Create Order Type Item Quantity Due Date Vendor
Purchase Order A S1007
Purchase Order A S2100
Production Order P
Purchase Order
Supplier S Delivery Date Item No. A1019 Quantity 40
Production Order
Product No. P Due Date Planned Quantity 50
Use the Order Recommendation report to display the list of all MRP recommendations according to the defined selection criteria. It enables you to see what items have to be purchased and what items have to be manufactured.
The report runs according to the results of the MRP recommendations and enables you to create production and purchase orders.
You can also change the quantities, the vendor, and the items or delete recommendations.
You display the report in the following ways:
From MRP Wizard, choose GoTo  Open Order Recommendations
Choose MRP  Order Recommendations

15. MRP: Unit Summary You are now able to:
Describe the complete MRP Process in SAP Business One
Manage sales forecasts in the system
Use the MRP wizard
Display the list of all MRP recommendations with the order recommendation report