The planning strategies explained in this section are designed for planning the procurement (production or purchasing) of components by planning the components themselves. This is particularly useful in the following cases:

• There is a variety of finished products (possibly with an irregular demand pattern where planning is not possible).
• The finished products are consumption-based.

The overall purpose of planning at component level is to procure components to stock (without sales orders) in order to react to customer demand as quickly as possible.

Choose a strategy for planning components, if:

• The components are not segregated; that is, they are not uniquely linked at specific orders.
• Costs should be tracked at component (material) level and not at order level.

Strategies for planning components can be used for both make-to-stock and make-to-order scenarios.

The planning of components has the following in common with make-to-stock strategies:

• It is possible to automate the planning stage by using information from the forecast, and passing on the results from these applications directly to Demand Management.
• Make-to-stock costing applies.
• In a make-to-stock environment, smoothing of production against customer requirements may be an important aspect.
• Strategies for planning components are usually combined with a lot size key or rounding values. In the following Sample Scenario sections, however, lot size key EX is used for the sake of simplicity.