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Modeling Lot Size

Objective

After completing this lesson, you will be able to describe production and transportation lot sizes

Production and Transportation Lot Sizes

Lot sizing allows you to model production and to set transportation quantities per period within limits, or according to a certain strategy.

Lot-Sizing Procedures

SAP Integrated Business Planning (IBP) for Supply Chain supports the following lot-sizing procedures:

Lot-for-Lot (default value):
Supply planning (infinite without shortages) and supply propagation heuristic algorithms does not bundle the demands for subsequent periods. The demand for each period is satisfied by a receipt in each period.
Periods of supply:
This lot-sizing procedure builds up stock to cover the demand of the current period and a definable number of subsequent periods (called the coverage time span) so that stock is high enough to cover the demand for these future periods. It bundles the dependent demand, the independent demand, and the production demand of the current period and a certain number of subsequent periods into one transport or production receipt planned for the current period.
Production cycle lot size:
This lot-sizing procedure is only relevant for production sources of supply. A production cycle defines the frequency in which a product is produced (for example, every 90 days). For location products that follow such a production cycle, the system builds up stock (in each period with a production event) that covers the demand of all subsequent periods until the next production period, that is, until the next period with production receipts greater than zero.

Lot-Size Parameters

SAP Integrated Business Planning (IBP) for Supply Chain supports the following lot-sized parameters:

Minimum Lot Size:
The transportation and production quantity cannot be lower than a minimum. If production or transport is triggered, the quantity must be equal to or higher than the minimum lot size. The heuristic algorithms and optimizer will respect the minimum lot size.
Maximum Lot Size:
This defines the maximum production or transportation quantity. Only the optimizer and the finite heuristic respect the maximum lot size.
Rounding Value:
You can use this parameter to plan customer, transportation, and production receipts only in multiples of an increment that you define, called the rounding value. You define the rounding value as an attribute of master data for customer, location, and production sources of supply. You can combine rounding values with the minimum lot size parameter.

Examples of Lot Sizes

Lot sizes are time-independent master data settings. Examples of lot sizes are shown in the table, Transportation Lot-Size (SOURCELOCATION), and in the table, Production Lot-Size (SOURCEPRODUCTION).

Transportation Lot-Size (SOURCELOCATION)

PRDID	LOCID	LOCFR	TMINLOTSIZE	TMAXLOTSIZE	LEAD TIME	TRATIO
P1	L1	L2	500	1000	1	0.5
P1	L1	L3	100	5000	2	0.5

Production Lot-Size (SOURCEPRODUCTION)

PRDID	LOCID	SOURCETYPE	PRATIO	PERIODSOFCOVERAGE	PMINLOTSIZE	PMAXLOTSIZE
P2	L1	P	1.0	3	1000	10000

Notes

Note the following points are relevant for heuristics:

If no values are specified for the minimum and maximum lot size, the lot-for-lot planning procedure is used.
If a minimum and a periodic lot size is specified, the system will plan to produce at least the quantity specified by the minimum lot size.

Demonstration: How to Execute a Planning Run with Lot Sizes Using the SAP Sales and Operation Planning Heuristic

Execute a Planning Run with Lot Sizes Using the SAP Sales and Operation Planning Heuristic

Task 1: Plan Using Minimum Transportation Lot Size

Display the stock transfer quantities for your T-F2## product.

Steps

If you made changes since your last execution of your heuristics operator Time-Series-Based Supply Planning Heuristic, re-execute the Time-Series-Based Supply Planning Heuristic operator and display the planned stock transfers for your T-F2## product ID. Use the Transportation tab of your Supply Planning favorite. Record the current values in the following table:
Ship-From Location ID
Location ID
Key Figure
Period + 1
Period + 2
Period + 3

2400
Projected Stock

2210
2400
Transport Receipts

2300
2400
Transport Receipts
1. In the SAP IBP, add-in for Microsoft Excel, open your Supply Planning favorite and choose the Transportation tab.
2. In the Planning View section of the IBP ribbon, choose Edit View → Edit Planning View.
3. Check if you have key figure Projected Stock in your planning view from previous exercise. Add if necessary.
4. In the Application Jobs section of the IBP ribbon, choose Run → SOP Operator, choose Time-Series-Based Supply Planning Heuristic, and choose Run.
5. When the job is finished, choose Refresh.
6. Record the values for T-F2## in the table.
Use master data workbook functionality to enter a value in the minimum transportation lot size for location 2400, product T-F2##, and ship-from location 2210, which is about 150% of the current value in transport receipts.
1. Choose Master Data Workbook → Create.
2. Select the Master Data Type Location Source and choose OK.
3. On the Location Source tab, filter for location ID 2400, product ID T-F2## and ship-from location ID 2210.
4. Enter a value in the minimum transportation lot size that is about 150% above the current value; that is, larger than the value in transport receipts for the same location-product combination.
  Note
  Take your transport receipts and multiply them by 1.5 to determine the input. For example, if your transport receipts are 1632, then you would determine that 150% of this value is 2448. In this example, you would enter the number "2448."
5. Choose Save Changes.
Run the Time-Series Based Supply Planning Heuristic operator and record the results in the following table:
Ship-From Location ID
Location ID
Key Figure
Period + 1
Period + 2
Period + 3

2400
Projected Stock

2210
2400
Transport Receipts

2300
2400
Transport Receipts
1. In the SAP IBP, add-in for Microsoft Excel, open your Supply Planning favorite and choose the Transportation tab.
2. In the Application Jobs section of the IBP ribbon, choose SOP Operator → Run, choose Time-Series-Based Supply Planning Heuristic, and choose Run.
3. When the job is finished, choose Refresh.
4. Record the values for T-F2## in the table.
Question: How did this affect the value in the Transport Receipts key figure?
Answer: The value of the Transport Receipts key figure is identical to the minimum transportation lot size value that you just entered.
Question: Were any other transport receipts affected?
Answer: The values for other locations remained the same for the first bucket. For following buckets the projected stock will be considered and therefore also less transport receipts from other locations will be calculated.
Question: Were any other transport receipts affected?
Answer: The values for other locations remained the same for the first bucket. For following buckets the projected stock will be considered and therefore also less transport receipts from other locations will be calculated.
Use master data workbook functionality to enter a value in the maximum transportation lot size for location 2400, product T-F2##, and ship-from location 2300, which is about 50% of the first value in transport receipts.
1. Choose Master Data Workbook → Create.
2. Select the Master Data Type Location Source and choose OK.
3. On the Location Source tab, filter for location ID 2400, product ID T-F2## and ship-from location ID 2300.
4. Enter a value in the maximum transportation lot size that is about 50% of the first value; that is, smaller than the value in transport receipts for the same location-product combination.
5. Choose Save Changes.
Run the Time-Series Based Supply Planning Heuristic operator and record the results in the following table:
Ship-From Location ID
Location ID
Key Figure
Period + 1
Period + 2
Period + 3

2400
Projected Stock

2210
2400
Transport Receipts

2300
2400
Transport Receipts
1. In the SAP IBP, add-in for Microsoft Excel, open your Supply Planning favorite and choose the Transportation tab.
2. In the Application Jobs section of the IBP ribbon, choose Run → SOP Operator, choose Time-Series-Based Supply Planning Heuristic, and choose Run.
3. When the job is finished choose Refresh.
4. Record the values for T-F2## in the table.
Question: How did this affect the value in the Transport Receipts key figure?
Answer: Not at all. The heuristic ignores the maximum lot size.
Question: Were any other transport receipts affected?
Answer: No, the values for other locations remained the same.
Question: What effect did this change have on the projected stock at location 2400?
Answer: No effect because the maximum lot size was ignored.

Task 2: Plan Using Production Lot Size

Display the production receipts and dependent demand for your T-F2## product.

Steps

To display the planned production quantities for your product ID T-F2##, use the Production tab of your Supply Planning favorite. Record the current values in the following table:

Location ID	Product ID	Key Figure	Period + 3	Period + 4	Period + 5
1000	T-F2##	Projected Stock
1000		Dependent Demand
		Production Receipts (source T-F2##_1000_0001)
		Production Receipts (source T-F2##_1000_0002)

In the SAP IBP, add-in for Microsoft Excel, open your Supply Planning favorite and choose the Production tab.
Record the values for the key figures in the table.

Use master data workbook functionality to enter a value in the minimum production lot size for location 1000, product T-F2##, and source ID T-F2##_1000_0001, which is about 150% of the first value in production receipts.
1. On the SAP IBP ribbon in the Master Data section, choose Favorites → Production Sourcing Rules.
2. Choose Master Data Workbook → Edit.
3. Select the Master Data Type Production Source Header and choose OK.
4. On the Production Source Header tab, filter for location ID 1000, product ID T-F2##, and source ID T-F2##_1000_0001.
5. Enter a value in the minimum production lot size that is about 150% of the value in production receipts for the same location-product combination.
  Note
  Take your production receipts and multiply them by 1.5 to determine the input. For example, if your production receipts are 1632, then you would determine that 150% of this value is 2448. In this example, you would enter the number "2448."
6. Choose Save Changes.

Run the Time-Series Based Supply Planning Heuristic operator and record the results in the following table:

Product ID	Location ID	Key Figure	Period + 3	Period + 4	Period + 5
T-F2##	1000	Projected Stock
T-F2##	1000	Dependent Demand
T-F2##	1000	Production Receipts (source T-F2##_1000_0001)
T-F2##	1000	Production Receipts (source T-F2##_1000_0002)

In the SAP IBP, add-in for Microsoft Excel, open your Supply Planning favorite and choose the Production tab.
In the Application Jobs section of the IBP ribbon, choose Run → SOP Operator, choose Time-Series-Based Supply Planning Heuristic, and choose Run.
When the job is finished, choose Refresh.
Record the values for T-F2## in the table.

Question: How did this affect the value in the Production Receipts key figure?
Answer: The value of the first production receipt is in accordance with the minimum production lot size value that you just entered. Subsequent receipts are adjusted accordingly.
Question: What effect did this change have on the projected stock at location 1000?
Answer: The value of the projected stock was increased, causing an excess of inventory at location 1000.
Use master data workbook functionality to enter a value in the maximum production lot size for location 1000, product T-F2##, and source ID T-F2##_1000_0002, which is about 50% of the first value in production receipts key figure.
1. On the IBP ribbon in the Master Data section, choose Favorites → Sourcing Rules.
2. Choose Master Data Workbook → Create.
3. Select the Master Data Type Production Source Header and choose OK.
4. On the Production Source Header tab, filter for location 1000, product T-F2##, and source ID T-F2##_1000_0002.
5. Enter a value in the maximum production lot size that is about 50% of the first value; that is, smaller than the value in production receipts for the same location-product combination.
6. Filter for location 1000, product T-F2##, and source ID T-F2##_1000_0001.
7. Remove your value in the minimum production lot size column.
8. Choose Save Changes.

Run the S&OP heuristic and record the results in the following table:

Product ID	Location ID	Key Figure	Period + 3	Period + 4	Period + 5
T-F2##	1000	Projected Stock
T-F2##	1000	Dependent Demand
T-F2##	1000	Production Receipts (source T-F2##_1000_0001)
T-F2##	1000	Production Receipts (source T-F2##_1000_0002)

In the SAP IBP, add-in for Microsoft Excel, open your Supply Planning favorite and choose the Production tab.
In the Application Jobs section of the IBP ribbon, choose SOP Operator → Run, choose Time-Series-Based Supply Planning Heuristic, and choose Run.
When the job is finished, choose Refresh.
Record the values for T-F2## in the table.

Question: How did this affect the value in the Production Receipts key figure?
Answer: The value of the Production Receipts key figure is identical to the Dependent Location Demand value since the Heuristic ignores maximum lot sizes.
Question: Were any other production receipts affected?
Answer: No, all production receipts remained the same because the maximum lot size was ignored.
Question: What effect did this change have on the projected stock at location 1000?
Answer: No effect because the value of max lot size is ignored by heuristics.
Use master data workbook functionality to delete all lot sizes used in this exercise.
1. On the SAP IBP ribbon in the Master Data section, choose Favorites → Sourcing Rules.
2. Choose Master Data Workbook → Edit.
3. Select the Master Data Type Location Source and add a new tab. On the second tab select the Master Data Type Production Source Header and choose OK.
4. On the Location Source tab, filter for location ID 2400 , product ID T-F2##, and ship-from location ID 2210 and 2300 to delete any Transportation Maximum and Minimum Lot Sizes and choose Save Changes.
5. On the Production Source Header tab, filter for location ID 1000, product ID T-F2##, and source ID T-F2##_1000_0001 and T-F2##_1000_0002 to delete any Production Maximum and Minimum Lot Sizes and choose Save Changes.
Re-run supply heuristics to re-balance the values in output key figures.
1. In the Application Jobs section of the IBP ribbon, choose Run → SOP Operator, choose Time-Series-Based Supply Planning Heuristic, and choose Run.

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