DDMRP and buffer level definition

#ddmrp

Dynamics 365 Supply Chain Management

The article discusses the calculation of buffer levels in the context of Demand-Driven Material Requirements Planning (DDMRP) for Microsoft business applications like Dynamics 365.
The Min/Max approach used in traditional MRP is compared to the new Reorder Point (ROP) introduced in DDMRP.
The article explains the calculation of Average Daily Usage (ADU) based on the forecast setup and the coverage group.
Two zone calculation factors, Lead Time Factor and Variability Factor, are introduced and their impact on Min/Max/Reorder Point calculations is explained.
The formula for calculating the Red Zone, which represents the area below the minimum quantity, is provided with an example calculation.
The Yellow Zone, representing the area between the minimum quantity and the reorder point, is calculated using the ADU and decoupled lead time.
The Green Zone, representing the area between the reorder point and the maximum quantity, is calculated using the minimum order quantity, ADU, decoupled lead time, and lead time factor.
The article mentions the Order Cycle, which determines the frequency in days between placing purchase orders, and its impact on the Green Zone calculation.
The Master planning module in Dynamics 365 allows for the automatic calculation of buffer levels based on the coverage group setup.

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