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SAP Note

    448960 - Net requirements calculation (documentation)  
Version   29     Validity: 12.11.2003 - active   Language   English

Header Data
Released On 08.01.2004 15:28:17
Release Status Released for Customer
Component SCM-APO-PPS Production Planning and Detailed Scheduling
Other Components SCM-APO-PPS-HEU Heuristics
SCM-APO-PPS-HEU-PP PP Heuristics
SCM-APO-PPS-SCF Scheduling Functions
Priority Recommendations / Additional Info
Category Consulting

Symptom
This note answers the following questions:

1. What is the net requirements calculation used for?

2. When is the net requirements calculation performed?

3. How does the standard net requirements calculation work?

4. What procedures are there for the net requirements calculation?

5. What are the differences between net requirements calculation and dynamic pegging?

6. Why is there a difference between net requirements calculation and fixed pegging?

7. How does the net requirements calculation work with the heuristic for planning material
shortage quantities?

8. What affects the 'Use requirement quantity' indicator in the SAP_PP_002 heuristic?

9. How are orders created by SNP handled in the net requirements calculation of the PP/DS?

10. Does the PP/DS horizon play a role in the net requirements calculation?

11. Are uncovered requirements summarized within the planning time fence?

1) What is the net requirements calculation used for?

The PP heuristics for product planning carry out a net requirements calculation in order to
determine uncovered product requirements. For this, the product requirements are consumed with the
existing fixed or unfixed product receipts. The product requirements include sales orders, planned
independent requirements, reservations, dependent requirements, stock transfer requirements and the
safety stock. Fixed receipt elements are

l Stocks, purchase orders and manufacturing orders

l Planned orders and purchase requisitions which were created manually or processed

In order to cover the material shortage quantities detected with the net requirements calculation, a
PP heuristic creates receipts after a net requirements calculation.
Most PP standard heuristics (or the algorithms used by the standard heuristics) use the standard net
requirements calculation with which requirements are consumed with fixed receipts to establish
material shortage quantities. For example, the following standard heuristics use the standard net
requirements calculation:

l Planning of standard lots

(/SAPAPO/HEU_PLAN_STANDARDLOTS algorithm)

l Planning of standard lots in 3 horizons

(/SAPAPO/HEU_PEGID_PERIODIC_LOT algorithm)

l Part period balancing

(/SAPAPO/HEU_PART_PERIOD algorithm)

l Least-Unit Cost procedure.: External procurement

(/SAPAPO/HEU_PUR_PLANNING algorithm)
l Groff procedure

(/SAPAPO/HEU_PART_PERIOD algorithm)

l Quota arrangement heuristic

(algorithm /SAPAPO/HEU_PLAN_QUOTA)
The quota arrangement heuristic can only be executed with the "minimize alerts" net requirements
calculation. The FIFO net requirements calculation (the procedure for including fixed receipts
first) cannot be selected.

l The standard heuristic for planning material shortage quantities

(algorithm /SAPAPO/HEU_PLAN_DEFICITS)
uses a slightly changed net requirements calculation, with which unfixed receipts, for example, can
also be used to cover uncovered requirements (see below).

2) When is the net requirements calculation performed?

The net requirements calculation is the first step performed by a PP heuristic during product
planning. (In order to plan products, you can call PP heuristics interactively in the product view.
However, these heuristics can also be called by the automatic planning or in the production planning
run by other heuristics, for example, by the SAP_MRP_001 or SAP_MRP_002 standard heuristics.)
SAP_MRP_002.)

3) How does the standard net requirements calculation work?

The standard net requirements calculation consumes the requirements with the fixed receipts first.
If not all requirements can be covered by fixed receipts, the heuristic carries out a lot sizing on
the basis of the material shortage quantities and creates new receipts. If you have set the re-use
mode "Delete unfixed receipts", the heuristic deletes all old, unfixed receipts and it replaces them
with newly created receipts. If you have set the re-use mode "Use suitable receipts", the heuristic
checks whether a newly created receipt is different from an old, unfixed receipt. If so, the
heuristic then deletes the old receipt and receives the new one. If not, the old receipt remains
unchanged.

4) What procedures there are for the standard net requirements calculation?

For the standard net requirements calculation, the following procedures are available:

l FIFO net requirements calculation (FIFO stands for "First in First out")

l Net requirements calculation with alert minimization

4.1) FIFO net requirements calculation (First-i n-f i r s t-o u t )

During this procedure (as in SAP R/3), the first requirement is covered by the first fixed receipt,
regardless of whether the requirement appears before or after the fixed receipt. The FIFO procedure
assumes that a fixed planned order or a manufacturing order is executed earlier than an unfixed
planned order. (Example scenario: A planned order that is not fixed cannot be executed earlier than
a fixed planned order or a manufacturing order, because it must still run the same steps as a fixed
order, e .g. the fixing or conversion into a manufacturing order. This takes time in which the
existing fixed planned orders and manufacturing orders are already transferred to execution. In such
a scenario it is therefore not possible to plan a new planned order before a fixed order). The FIFO
procedure also requires all receipts to be continuously fixed between the planning date and a
certain date in the future, because otherwise a receipt is no longer used for the requirements for
which it was initially planned.
Example: For date t1 there is a requirement B1 and at the later date t2, a requirement B2. Planning
is conducted with the exact lot size. During planning, a suitable receipt (Z1 or Z2) was created for
each requirement. Now the receipt element Z2 is fixed. In this case, the FIFO net requirements
calculation covers the requirement B1 with the fixed receipt Z2.  The requirement B2 is therefore
not covered and must be covered by a receipt element, Z3, which must be specially created. The
result is that at date t2 there are two receipt elements, Z1 and Z3, and the requirement B1 is
covered by the late receipt Z2. This delay is detected by the pegging which generates a
corresponding alert.
In SAP R/3, the system generates rescheduling proposals in this situation.
The advantages of FIFO net requirements calculation are as follows:

l It is easy to understand.

l It corresponds to the logic of the material requirements planning in SAP R/3.

If the heuristic is to use the FIFO procedure for the net requirements calculation, set the
indicator "Consider fixed receipts first" in the heuristic settings.

4.2) Net requirements calculation with alert minimization

This procedure includes the following individual steps:

1. The heuristic consumes requirements which are in the past or in the planning time fence with
fixed receipts which are in the past or in the planning time fence. It does not matter whether
or not a requirement can be covered in time by a receipt. Requirements within the planning time
fence can no longer be covered in time by an automatic planning anyway.
2. The heuristic consumes the fixed receipts that have not yet been consumed with requirements
that appear later. The receipts are consumed in chronological sequence. In practice, a receipt
can also be used to cover requirements for an slightly earlier requirement. A receipt for non-
account heuristics therefore also covers earlier requirements, provided the delay for the
receipt does not exceed the alert threshold for late receipts. The allocation with previous
requirements is not possible for conti-heuristics, that is, heuristics for the planning of
products with continuous material flows. (The alert threshold is defined in the location product
master. For pegging, the alert threshold defines from which delay of an availability date
against a requirements date the system issues an alert. However, the selected alert threshold
cannot be too high: If the alert threshold is outside the pegging interval, no alert is issued
for the delay, that is, the planner is not notified of this planning problem.

3. The heuristic consumes the not yet consumed, fixed receipts with earlier requirements. Later
there will of course be a deadline alert in this situation. If the system had covered the
requirements with new receipt elements, the fixed receipts that were not yet consumed would be
surplus and would receive a surplus alert. The system generates date alerts instead of
overcoverage alerts, as these would be more easily repaired through a PP/DS optimization or
manually in the planning board.

The last step is not required for conti-heuristics, for example, with the standard heuristic for
planning standard lots with consecutive material flows SAP_PP_C001.
The last step is not required as of APO Release 3.1, even if the shelf life is being used.
If there are still uncovered requirements after this last step (or with conti-heuristics after the
previous step), the heuristic attempts to create new receipt elements. If the heuristic cannot plan
the receipt elements so early that the requirements are covered in time, then the planner must
intervene manually and reschedule receipts.

The net requirements calculation with alert minimization has the following advantage:

l The fixing of a receipt element that lies after unfixed receipts does not destabilize the
planning. The procedure is therefore more robust compared with different manual procedures in
the planning.

l

If you want the heuristic to use this procedure for the net requirements calculation, do not set the
"Consider fixed receipts first" indicator in the heuristic settings.

5) What are the differences between net requirements calculation and dynamic pegging?

l Dynamic pegging can assign all receipt elements to a requirement that are in the pegging area,
that is, location, planning version, account assignment and so on of the receipt and
requirements must agree. Furthermore, dynamic pegging takes into account the pegging interval
(defined by the maximum earliness and the maximum allowed delay of the availability date as
against the requirements date) and the shelf life data from the product master. For details
about pegging, see note 393437.

l Unlike dynamic pegging, the net requirements calculation distinguishes between fixed and unfixed
receipt elements. However, a heuristic can only change unfixed receipts; it cannot change fixed
receipts. For this reason, the heuristic first allocates the requirements suitable for the fixed
receipts. If all requirements can be covered by fixed receipts, the heuristic cannot delete the
fixed receipts.

l The net requirements calculation does not consider the pegging interval.

If there is a requirement for a product and a fixed receipt element that is later than the maximum
allowed delay in the product master, the heuristic cannot change the receipt, since it is fixed.
However, the heuristic could attempt to create a new receipt element in time. If this were to
succeed, the fixed receipt element would, however, be a surplus. In theory, you have the choice to
accept the date violation or to produce a surplus. Heuristics accept the date violation. For this,
the system generates a date alert which refers to the problem which can then be solved
interactively.

6) Why is there a difference between net requirements calculation and fixed pegging?

If there is a fixed pegging relationship between a requirement and a receipt, only the remaining
quantities of the requirements and the receipt are taken into account during the net requirements
calculation, that is, the requirement quantity minus the fixed pegging quantity or the receipt
quantity minus the fixed pegging quantity. A fixed pegging relationship determines that a
requirement should be covered by a certain receipt or part of the receipt. The net requirements
calculation must respect this assignment.

Sometimes users want the result of the net requirements calculation to be saved in the form of fixed
pegging relationships. This is intended to improve transparency and make the net requirements
calculation easier to understand. However, it is not useful to fix the result of the net
requirements calculation. If the requirement situation changes, a new net requirements calculation
can assign the existing fixed receipt elements to the requirements again and thereby achieve a more
favorable planning result. Example: a receipt Z1 at the time t1 covers a requirement B2 at the later
time t2. If a new B1 requirement is now added to the t1 event, then the B1 requirement can be
covered from the already existing Z1 receipt element during dynamic pegging. A new receipt element
must be created at the time t2. If Z1 and B2 had been linked by a fixed pegging relationship, the
requirement B1 could not have been covered. The new receipt element would have had to be created for
the t1 event. Since t1 is closer to today's date, this would have been more complicated. In
addition, the product would have unnecessarily been in stock for the requirement B2.

7) How does the net requirements calculation work with the heuristic for planning material
shortage quantities?

The net requirements calculation of the heuristic for planning material shortage quantities is
different from the standard net requirements calculation. First, the heuristic for planning
SAP_PP_003 material shortage quantities performs the net requirements calculation for all
requirements and the punctual fixed receipt elements. If all requirements are covered by this, the
existing, unfixed receipt elements are surplus and can be deleted. However, the heuristic only
deletes the excess receipts if you have set the "Reduce surpluses" indicator in the heuristic
settings.
If the punctual fixed receipt elements cannot cover all of the requirements, then the heuristic uses
the unfixed punctual receipt elements. If only some requirements have been covered, the heuristic
uses later fixed and unfixed receipt elements to cover the requirements. The requirements are
covered in each case by the receipt that is closest in time. This causes excess receipt elements and
the remaining open requirements. If you have set the "Plan shortages" indicator in the heuristic
settings, the heuristic creates receipts for the uncovered requirements. If you have set the "Reduce
surpluses" indicator, the heuristic deletes excess, unfixed receipts.

The net requirements calculation is always carried out with the procedure "Net requirements
calculation with minimizing of alerts" (see above). There is no net requirements calculation
according to the FIFO logic in the heuristic for planning material shortage quantities.

Up to and including Release SAP APO 3.0 Support Package 18 and in Release SAP APO 3.1 Support
Package 1, dynamic pegging, which evaluates the receipts and requirements in the liveCache, was
still used in the SAP_PP_003 heuristic to determine shortages and surpluses. However, the net
requirements calculation has the following advantages (see point 5):

l Punctual fixed receipt elements are first taken into account during the net requirements
calculation. This prevents a requirement from being covered by an unfixed receipt element and a
punctual fixed receipt represents a surplus, that cannot be deleted as a result of fixing.

l All receipt and requirements elements are read from the liveCache, and not only those with
surpluses or shortages. All fixed receipt elements are required for a re-explosion of the fixed
receipt elements.

8) What affects the 'Use requirement quantity' indicator in the SAP_PP_002 heuristic?

The sales order distinguishes between the quantities and dates requested by the customer and the
confirmed quantities and dates. The confirmed quantities and dates are determined using the ATP
check. When planning with a requirement quantity, each procurement planning heuristic once again
tries to cover the customer's preferences using new planned orders or purchase requisitions. As a
result, the quantity of products that can be confirmed to the customer may change. The sales orders
confirmations are adjusted to the available finished product quantities by a BOP backorder
processing.
In contrast, quantities that have been confirmed once only are sufficient for planning with
confirmed quantities. The system does not try to improve planning to meet customer requests. If the
system does not perform an ATP check, planning with confirmed quantities (using a procurement
planning heuristic) will not generate any receipt elements.
For this reason, planning according to the requirement quantity is the rule for procurement planning
heuristics. For more information, see notes 163576 and 393437.

9) SNP orders in the net requirements calculation

Unfixed SNP receipt elements in the PP/DS horizon are not taken into account in the net requirements
calculation. This causes the requirements within the PP/DS horizon to be covered by PP/DS receipt
elements (or stocks and receipt elements from R/3).
SNP receipt elements outside the PP/DS horizon are used to cover requirements, provided that the
requirement also appears outside the PP/DS horizon.
Note that SNP orders only play a role in the net requirements calculation if SNP and PP/DS are
executed in the same planning version. Such an integration of SNP and PP/DS is problematic. See note
481906.

10) How is the PP/DS horizon taken into account in the net requirements calculation?

The PP/DS horizon is only used to check whether SNP receipt elements participate in the net
requirements calculation (see above). The net requirements calculation is always carried out over
the complete time axis. Only when you create the new PP/DS receipt elements does the system check
whether these appear within the PP/DS horizon. PP/DS receipt elements are not created outside the
PP/DS horizon. This ensures that with periodic lots, the quantity of the last PP/DS receipt element
covers the requirements of the complete period even if a part of the period appears outside the
PP/DS horizon.

11) How are requirements handled within the planning time fence?

The net requirements calculation does not summarize any requirements within the planning time fence
and also does not change any requirements dates. If there are several requirements within the
planning time fence without sufficient receipt elements, the net requirements calculation also
calculates several material shortage quantities. If no planning time fence is set, but there are
several requirements without sufficient receipt elements in the past, the net requirements
calculation also calculates in the past.
For exact lot sizes, every material shortage quantity is covered by its own receipt element. In
infinite scheduling, these are all created simultaneously at the end of the planning time fence. The
planner can then try to manually move these receipt elements to the requirements date/time (the
planning time fence only applies to the procurement planning heuristics).
With periodic lot sizes the shortages are taken together within the planning time fence according to
the original requirements dates for periodic plays. If the planning time fence is longer than a
period or if there are also requirements in the past, the system may create several lots.
As of APO Release 3.1, a switch is available in the standard lot size heuristic to summarize past
requirements. If the switch is set, the standard lot size heuristic creates a large receipt element
to cover all shortages before the planning time fence (or all shortages in the past). The summary of
the shortages within the planning time fence only occurs after the actual net requirements
calculation.
Other Terms
Heuristic, planning run, net requirements calculation, documentation, FAQ

Reason and Prerequisites
.

Solution
.

Other Attributes

Transaction codes VERF

Validity
This document is not restricted to a software component or software component version

References
This document refers to:
SAP Notes
1168100   PPDS Application log reports number of orders is >500
1167216   Usage of Product Priority
481906   SNP - PP/DS integration (documentation)
451997   SURPLUS_DELETE: Reducing planned order quantities
441102   Consulting notes in PP/DS
393437   Pegging in APO: background information (documentation)

This document is referenced by:
SAP Notes (6)
393437   Pegging in APO: background information (documentation)
441102   Consulting notes in PP/DS
451997   SURPLUS_DELETE: Reducing planned order quantities
481906   SNP - PP/DS integration (documentation)
1167216   Usage of Product Priority
1168100   PPDS Application log reports number of orders is >500