Planned order receipt is a future projected receipt based on the generation of a planned order, that has not yet been firmed into a scheduled receipt.
Planned order receipts are also known as the released orders or released MPS, in a planning schedule. It is a component of the MRP or materials requirement planning and helps in step by step MRP calculation. It is the amount of inventory finally ordered after considering the remaining stock, and also the ones that are scheduled to arrive later.
These are orders that are placed or will be placed and are scheduled to be received at the beginning of a certain transitory phase. It is a well-planned release of an order with a specific quantity of raw materials, parts, assemblies, subassemblies.
These raw materials are then used up as the inventory and added up with the stock remaining also known as projected available balance, from the previous time fence or period.
Previously ordered receipts are also scheduled to arrive and thus needs to be added up to the MPS, during that time period. The available stock of inventory added to the scheduled receipts of materials due and then netted from the gross requirements gives us the value for net requirements.
This is a value that quantifies the units required for the next time fence. The projected available balance, which is the balance that is being projected into the future as the required number of inventory remaining can even, be negative.
How is it calculated?
Planned order releases are mostly based on whether the projected available is negative or below zero, it means all the inventory has been used up and more needs to be ordered in.
A planned order receipt gives a date on which to expect an order. If the projected available is zero or is more than that of a certain safety stock value, there is obviously no requirement to put in a planned order release.
When a planned order is released it is always a confirm order because it has been calculated after netting off the inventory and thus it is not similar to the anticipatory order releases. A planned order release meaning is always about a much more confirmed event. Hence, it is controlled by an MPS, a computer-generated program that maintains a schedule and keeps a tab on the planned orders.
During a fixed time fence, if the projected available balance is zero, the MPS will not put any further order. But once the time span is over it will again generate an order after netting and evaluation of the on-hand inventory.
Example of planned order receipt
For example, the on-hand inventory present at a given moment is 40, and a demand for the first week is 45. Now as the demand is more than the projected balance, the entire balance is used up along with 5 more units. This makes the projected available balance for the next week in the negative (-5). Now, as the projected balance is negative, an MPS is released, of 60 units which make the balance as 55. This MPS released is known as a planned order release.
Now this week, there is a demand for 40units. This makes the projected available as 15. As the projected available is now positive, it does not require any MPS to be released. Hence, MPS is 0. And the date on which the planned order is due is hence known as the planned order receipt. Thus planned order releases are always equal to planned order receipts in terms of quantity.
Get more definitions about planned order receipt and other ERP related terms here.