Examining Plan Modification Features Section Objectives Atthe end of this section, you should be able to. + Examine quantity-based features © Examine time-based featuresOrder Modifiers Planned Requirement Orler hte A=72 tam A= 100 Order Modifiers With no extrzordinary information, the planning process creates planned orders with quantities that equal the remaining net requirements (Jot-for- Jot). Order modifiers are item attributes that vou can set thet may cause a planned order quantity thet is different from the remaining net requirements (/or sizing). They do not apply to items with WIP Supply Type of Phantom. ‘You use order modifiers to obtain planned orders that you are more likely to use in your environment. For example, you may purchase an item from a vendor who only provides it on pallets of quantity 100. If you are short 72, having the planned order quantity setto 100 instead of 72 supports this need. Oracle material planning uses a priority sequence (precedence) of order modifiers. It applies certain order modifiers before others and rules out certain order modifiers based on its using certain other order modifiersOrder Modifiers There are six discrete order modifiers given in order of precedence: Fixed days supply: One planned order for this item must cover all te shortages for the number of days specified in the value. For example, if the net requirements are 50 on Monday, 100 on Wednesday, 70 on Thursday and you have set fixed days supply to five, the planning process will create one planned order, with. ‘quantity of 220 (50 + 100 + 70) and due on Monday. The period start dates are not fixed: in the example, the next petiod of five days would not always start on the following Monday, but would start on the next day after Friday that has net requirements ‘Therefore, the next period of five days could be the following ‘Wednesday through the second Tuesday. Fixed order quantity: The planned order quantity must always be this value, For example, if the net requirements are 1 and vou have set fixed order quantity to 200, the planning process will creste one planned order with quantity of 200. Tf set, the planning process skips to the modifier Round order quantities. Fixed lot multiple: The planned order quantity must always be a multiple of this value. For example, if the net requirements are 400 and you have set fixed lot multiple to 150, the plaming process will create one planned order with quantity of 450. Minimum order quantity: The planted order quantity may never bbe less than this value For example, ifthe net requirements are 100 and you have se minimum order quantity to 150, the planning process will create one planned order with quantity of | 150. If set. the planing process skips to the modifier Round order quantities Maxismam order quantity: One planned erder for this item may not have a quantity more than this value. For example, if the net requirements are 200 and you have set maximurn order quantity to 180, the planing process will create two planted orders, one sith quantity of 150 and the other with quantity of 50. Order Modifiers Round order quansicies: The planned order quantity must always bbe a whole number; the planning process always rounds fractional {quantities up to the next highest whole number. For example, if the net requirements are 99.2 and you have selected round onder ‘quantities, the planning process will create one planned order swith quantity of 100.Safety Stock Safety stock instructs the planning process to leave excess inventory at the end of 2 period. Excess inventory is inventory that you do not need to supply the demand for a period. You use safety stock to overplan supply because you think the actual gross requirements may actually be greater than those stated in the material plan. Use shrinkage and yield to instruct the planning process to overplan supply because you expect to receive or to produce some unusable material. Interns of the planning chart, if an item has safety stock defined, the planning process arranges for projected available to be the safety stock quantity; otherwise the planning process arranges for projected available to be zero ‘You can set item safety stock in Oracle Inventory and Oracle material planning; the planning process will use information ftom either. You instruct the planning process in which information to use by setting the] item attribute Safety Stock Method. + Non-MRP planned instructs the plamiing process to use safety stock information ftom Oracle Inventory. + MRP planned % instructs the planning process to use safety stock information from Oracle material planning.Safety Stock: Inventory 7s PERIODS ‘Gross Requirements 100 ‘Scheduled Racapts Not Roquiromants 40_[ 300 0 Planned Oraer Due wwo_|300 soo Prjecedavaiate 10 [so [so |s0 |s0 Manual Userdetinet arcontace | Safty Stock = 50 ean AbsoWie| Deviation Safety Stock Information in Oracle Inventory ‘You can use any of the following three methods to set the safety stock evel for an item: © Manual: You enter safety stock levels and a start date A safety stock level is in force until another safety stock level xeplaces it © User-defined percentage: You provide « forecast name and a percentage Oracle Inventory calculates a safety stock level from each forecast entry as the percentage of that forecast entry. The calculated safety stock level from a forecast entry begins on the date ofthe forecast entry and ends on the day before the next forecast eany Safety Stock ‘© Mean Absolute Deviation: You provide a forecast name and a service level. Oracle Inventory calculates the forecast accuracy’ for each item by comparing the historical entries in that forecast with the issues from stock during the same time periods. Given that forecast accuracy, Oracle Inventory calculates a safety stock level from each forecast entry designed to provide your requested level of service. In general, the higher the forecast entry quanti and the lower the forecast accuracy, the mere safety sock you need.Safety Stock: Material Planning PERIODS 1 [2 [s |e Gross Requirements 100 | 300 500 ‘Scheduled Recapts Net Requirements ist | 307 450 Planned Order Due a57_| 387 450 Projacted Available 10 [67 | 134 [134 [#4 Safety Stock Bucket Days = 3Safety Stock Percent = 50% Item attributes Safety Stock Calculation in Oracle Material Planning The planning process calculates a safety stock level for each dav during the requirements explosion. The safety stock level is « percentage of the average gross requirements for a day or more. You must enter two safey stock item attributes fer this method © Safety Stock Bucket Days: The number of days over which to average gross requirements # Safety Stock Percent: The percent of average gross requirements to use for safety stock levelNo Shrinkage or Yield A | Deand 100 ‘Snorage 100 oo Pal CO ra Demand for Component B= 100* 2= 200 Demand for Component C= 100* 1 = 100 Shrinkage and Yield ‘You use shrinkage and yield to instruct the planning process to overplan supply because you expect to receive or to produce some unusable matetial. Use safety stock to overplan supply because you think the gross requirements may actually be greater than those stated in the material plan, To set values for shrinkage or yield, you must choose an average amount of unuszble material. In actual practice, vou may receive or produce different amounts of unusable material for an item on different days. The example shows a requirements explosion without modification by shiinkage or yield.Shrinkage Demand 100 Shortage 125 cro 20 |B(2)| /C (1) A Demand 5 Shrinkage Rate Assembly A =20°% Shortage Assembly A = 100/(1~ 02) Demand Component Shrinkage Shrinkage applies to the assembly. For purposes of shrinkage, a purchased item is an assembly. Shrinkage is an item attribute and its unit of measure is percent. If the shrinkage factor is 20%, enter 20, not 0.2 The planning process applies shrinkage when it determines the scheduled receipts and planned orders of an item based on the demand for that same item. The effect of these calculations is to: * Reduce the expected quantity from each scheduled receipt by the shrinkage factor, thereby increasing net requirement quantity + Increase any planned order quantity by the shrinkage factorShrinkage and Yield The Scheduled Receipt Quantity of an item with a shrinkage factor is defined as follows: SR=RCSR* SE SR = Scheduled Receipts RCSR = Regularly Calculated Scheduled Receipts SF = Shrinkage Factor ‘The Net Requirement Quantity for an item with a shrinkage factor is defined as follows: NR=RCNR/(1-SF) here: NR = Net Requirements RCNR= Regularly Calculated Net Requirements SF = Shrinkage Factor Inthe example, the net requirements for A without a shrinkage factor is 100, the same as demand: with a 20% shrinkage factor, it is 125 [100 /(1 - 0.2)], more than demand. The situation that the planning process has planned for is thar: © You create a work order for and produce 125 of item A. + You inspect 125 of item A. detemmine that 25 are bad. and dispose of them. Shrinkage and Id The effects of. shrinkage cascade down the bill of material to the items below am item with a shrinkage factor. In the example. item B has gross requirements of 250: instead of 200 without the item A shrinkage Factor, and item C has gross requirements of 125: instead of 100 without the item. ‘A shrinkage factor. You need to purchase more component items to ruin and to dispose. Note that you may not specify a scrap rate or shrinkage factor by operation so as to reduce the quantities of component items needed at later operation steps because you scrapped their assemblies at earlier operation stepsYield enans 100 A | shortage 100, — geen) (2y| fou) ferent Yel Factor Component B ~ 50% Yield Factor Component ¢ = 100% Usage of Component Bin Assembly A=2/09=22 mand for Component = 190° 22 = 220 Demand for Component = 100° 1 = 100, Yield ‘Yield applies to the component. All items in 2 standard bill of material are components except those at the top level. Yield is a bill of material component attribute that allows youto ruin a component at a different rate for each assembly that needs it. Its unit of measure is each. If the yield factoris 90%, enter 0.9, not 90. The planning process applies vield when it determines the gross requirements of an item based on the planned orders of the item’s assembly. The effect of this calculation is to increase the gross requirement quantity by the yield factor. Shrinkage and Yield ‘The planning process increases the gross requirement quantity of an item with a yield factor by temporarily calculating a new usage quantity of the component in the assembly before multiplying it by the assembly shortage ‘The Temporary Usage Quantity is defined as follows TUQ=UQ/YF where: TUQ= Temporary Usage Quantity uQ ‘Usage Quantity YF Yield FactorInthe example, the usage quantity of B in A without a yield factor is 2; with a 90% yield factorit is 2.2 [2/0.9]. This results in gross requirement quantity for B of 220, instead of 200 without the item B yield factor. The situation that the planning process has planned for is that © You create a work order for and produce 100 of item A * You issue 220 of item B from inventory and, during the production process, either or both of the following things happen, causing you to dispose of item B: — You pick up an item B and determine that itis bad. — You pick up an item B, begin to assemble it with item C, and rain the item B. ‘The effects of shrinkage cascade down the bill of material to items below an item with a yield factor. If vou create a discrete job for an item with a vield factor. the pick list will show the increased quantity In the example, the pick list quantity for item C ima discrete job for 100 of item A will be 220. If you would prefer the pick list to call for 200 of item C, assign a shrinkage factor to the item instead of a yield factor Shrinkage and Yield Together A | Semerd 100 Shortage 125 — Demand pe |B (2) fC (4)) Sst" Shrinkage Rate Assembly A = 20% Shortage Assembly A = 100 (1-0.2)= 125 Yield Factor Component E = 90% Yield Factor Component C = 100% Usage of Component Bin Assembly A =2 /0. Demand for Component B = 125*2.2= 275 From Base Shortage on Assembly A = 100* 2: From Shrinkage Rate Shortage on Assembly A. Demand for Component ¢ = 1257 1 = 125 Shrinkage and Yield Together The example shows planning conducted with both shrinkage and yieldMaterial Scheduling Methods: rae sea “Assambly Component nl a T2945 OT SO I219 18151017 1 187024 cman se Assembly ‘comoonent CLL Late e Material Scheduling Methods With no extraordinary information, the planning process suggests that components of a planned order should be due into inventory on the order start date In the diagram, the component due date is day 11, the same day on which you will begin production. To invoke this option, you must set the material plan option Material Scheduling Methed to Onder Stant Date. Because you may net need all of the component material on the day that ‘you begin production, you can instruct the planning process to suggest that Components of a planned order should be due into inventory on the date that the operation in which they are used starts, In the diagram, the component due dateis day 18. You must take three actions to invoke this option: * Set the material plan option material scheduling method to operation start date, + Inthe item bill of material, state at which operation you use each, component. Material Scheduling Methods © Inthe item routing, set the lead time percent that states the percent of the labor will be completed when each operation starts. For example. if your item routing has two operations, each of which has eight hours labor, the lead time percent of the first operation is 0% and the lead time percent of the second is Note that Oracle Bill of Materials calculates lead time percent during its lead time calculation or you may enter values.Inside | Outside Within Today Time Fence Planning Horizon Time Fences A time fence is an item attibute that divides the time between today and the planning horizon into two parts. Different rules apply on each side of the time fence. ‘You refer to the area between today and the time fence as inside the time Jence or within the time fence. You refer to the area between the time fence ‘and the planning horizon as outside the time fence. The discrete planning process uses three time fences sales oraers | salea orsers Porecasts Manual Toslay {pened Reming Time Fences ‘Demand time fence: You use this time fence to plan sopy term, only to hard independent demand. Osten, service items have a forecast, but vou prefer only to plan to build that quantity fer which you nave sales orders ‘© Insidethe demand time fence, the planning process will use only independent demand frem sales orders. + Outside the demand time fence, the planning process will use all independent demandMove out Make new Cancel Move in Move out Cancel Today Planning Planning Time Fence Horizon Time Fences Planning time fence: You usc this time fence to create a frozen zone in the short term in which the material planer, not the planning process, is most responsible for insuring the balance of supply with demand. * Inside the planning time fence, the planning process will not create planned orders and suggest that you change the date of a scheduled receipt when the new due date will fall inside the time fence. © Outside the planning time fence, the planning process will create planed orders and suggest that you change the date of a scheduled receipt when the new due date will fall outside the time fence.Planning Planner process releases releases planned orders planned orders: Today Release Planning Time Fence Horizon Time Fences Release time fence: You use this time fence to instruct the planning process in the amount of human intervention needed to send planned order suggestions to Oracle Purchasing and Oracle Work in Process. Creating a release time fence specifies the number of days fiom the material plan execution date that the planning process will automatically send planned order suggestions to Oracle Purchasing and Oracle Work in Process with no human intervention. For some items, you want a material planner to review the planned orders prior to sending them. For other items, vou want to accept the planning process suggestions without a material planner’s review. Use this feature for items that need little or no planner intervention, To use this feature. create a release time fence for the item and the planning process performs as follows «Inside the planning time fence. the planning process will automatically send planned order suggestions to Oracle Purchasing and Oracle Work in Process with no human intervention Time Fences * Outside the planning time fence, the planning process will never automatically send planned order suggestions to Oracle Purchasing and Oracle Werk in Process: you must review the suggestions before sending them. ‘Using this feature does not disable waming messages about the item from the planning process.