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### Example: Holidays, Lead Time, and Order Interval in MRP Calculations

This example presents how MRP calculates supplies and demands considering holidays, lead time, and order intervals. You can use the example to understand how the three factors jointly affect the MRP calculation.

The following table shows an item's inventory demands. The planning settings are as follows:

• Planning horizon: July 29 to August 5.

• Order Interval: start on each Monday. In this example, August 3 is Monday.

• Holidays:

• August 1 and 2 are the weekend, and August 3 is a public holiday.

• You select the Consider Holiday checkbox in the MRP wizard.

• You deselect the Set Weekends as Work Days checkbox in the Holiday Dates window.

In the table below, holiday dates are marked in boldface.

1. Identify the inventory demands as shown in the table below.

 Date 7.29 7.30 7.31 8.1 8.2 8.3 8.4 8.5 8.6 (Future) 8.7 (Future) 8.8 (Future) Demands D1 D2 D3 D4 D5 D6 D7 D8
2. Adjust backwards those demands that fall on holiday dates. For more information about how MRP adjusts supplies and demands for holidays, see MRP Wizard, Step 2: Scenario Details.

 Date 7.29 7.30 7.31 8.1 8.2 8.3 8.4 8.5 8.6 (Future) 8.7 (Future) 8.8 (Future) Demands D1+D2+D3 D4 D5 D6 D7 D8
3. Create initial order recommendations for demands based on the lead time definition.

Note

When considering holidays in MRP calculations, lead time and order interval settings are both considered in work days. In this case, the MRP recommends orders two work days prior to the due date.

End of the note.

For demands D1, D2, and D3, the MRP cannot fulfill the three-day lead time requirement, for the MRP cannot make any recommendation before the start of the planning horizon. For demands D4, D5, and D6, the MRP moves them three work days prior to the due date, skipping defined holidays, August 1 to 3. Therefore, the MRP schedules the recommendation for these demands to the earliest possible date within the planning horizon, and that is July 29.

 Date 7.29 7.30 7.31 8.1 8.2 8.3 8.4 8.5 8.6 (Future) 8.7 (Future) 8.8 (Future) Initial Recommendations (IR) IR1 (D1+D2+D3+D4) IR2 (D5) IR3 (D6) IR4 (D7) IR5 (D8)
4. Group demands to the first work day of each order interval period.

According to the order interval setting, each Monday is the beginning day of the weekly order interval. This planning horizon covers two order intervals:

• First interval date: July 27, Monday (Not included in the planning horizon)

• Second interval date: August 3, Monday (Public holiday)

Note

For weekly intervals and monthly intervals, if the first interval date is not covered in the planning horizon, the application does NOT group the recommended quantities for the first interval. From the second interval on, the application groups the recommended quantities to the interval date, and if it runs into holidays, moves the recommendations later to the closest work date.

End of the note.

In this example, as shown in the table below, the application does NOT group the recommended quantities for the first interval. The second interval starts on Monday, but August 3 happens to be a holiday; therefore, the application moves the grouped recommended quantities later to the closest work day, and that is August 4.

In this example, the MRP finally creates four order recommendations:

• July 29: Order recommendation OR1

Note

Since the MRP cannot satisfy demands D1, D2, and D3 on time due to insufficient lead times, on the MRP Results tab, the order recommendation R1 appears in red.

End of the note.
• July 30: Order recommendation OR2

• July 31: Order recommendation OR3

• August 4: Order recommendation OR4

The table below shows how MRP groups the recommended quantities according to the order interval:

 Date 7.29 7.30 7.31 8.1 8.2 8.3 8.4 8.5 8.6 (Future) 8.7 (Future) 8.8 (Future) Order Recommendations (OR) OR1 (IR1) OR2 (IR2) OR3 (IR3) OR4 (IR4+IR5)
5. If you select to group orders by Every X Days, the interval starts on the very first day when recommendations are needed. If you select to group orders by every two days, the calculation goes as follows:

The planning horizon contains three order intervals:

• July 29: the first day when recommendations are needed and thus the first order interval date

Note

If you choose to group order recommendations Every X Days, the first order interval date is the first day within the planning horizon when there are recommendations required. Therefore, if there is no recommendation needed on July 29 in this example, the first interval starts on the next work day with recommendations.

End of the note.
• July 31: the second order interval, two work days after the first interval

• August 5: the third order interval, two work days after the second interval

The table below shows how the MRP creates order recommendations if you use two-day order intervals.

 Date 7.29 7.30 7.31 8.1 8.2 8.3 8.4 8.5 8.6 (Future) 8.7 (Future) 8.8 (Future) Order Recommendations (OR) OR1 (IR1+IR2) OR2 (IR3+IR4) OR3 (IR5)