What is reorder point planning in SAP PP-MRP - Material Requirements Planning?

SAP Term: reorder point planning

• Component: PP-MRP

• Component Name: Material Requirements Planning

• Description: A procedure in materials planning. If the reorder point is greater than warehouse stock, a procurement proposal is created by MRP. Reorder point planning can be: Automatic Manual

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• Key Concepts: 
  Reorder point planning is a component of SAP's Material Requirements Planning (PP-MRP) module. It is used to determine when a company should order more materials or products in order to maintain a certain level of inventory. The reorder point is the predetermined level of inventory at which an order should be placed. 
  
  How to use it: 
  Reorder point planning can be used to determine the optimal time to place an order for materials or products. It takes into account factors such as lead time, safety stock, and demand forecasts in order to determine the best time to place an order. The system will then generate a purchase requisition or production order when the reorder point is reached. 
  
  Tips & Tricks: 
  It is important to set realistic reorder points that take into account factors such as lead time and safety stock. If the reorder point is set too low, it can lead to stockouts and lost sales. If it is set too high, it can lead to excess inventory and higher costs. 
  
  Related Information: 
  Reorder point planning is closely related to other components of SAP's PP-MRP module such as material requirements planning (MRP) and capacity requirements planning (CRP). It is also related to inventory management and supply chain management.