What is a scheduled receipt?
A scheduled receipt is items due to be received in a particular time period. (An open order that has an assigned due date).
It is like an old order that is about to arrive at a specific date. The company keeps a tab on the scheduled arrivals of the required materials, which are mostly raw materials required for the functioning of the manufacturing unit.
Scheduled receipts are a component in the Materials Requirements Planning or MRP, and there is a column that lists the date of scheduled arrival for each component. It also mentions the quantity that is due, for each component. This information is used up in calculating the MRP, and thus the net requirements of raw materials are calculated.
Example of scheduled receipt
A small company of handmade chocolate is extremely famous and has high demand in the market. The company prepares 10 cartons of chocolates every month. For that, it requires 50kilograms of flour every month. Now in a particular month due to festivities, there was an increased demand for chocolate, the company used up all the flour available and sold all the chocolates. They also put in an order for 20 kilos of flour from the supplier, which was scheduled at arriving 2 weeks later.
Now in the next month, we calculate the net requirements. The combination of on-hand and scheduled orders is added up and subtracted from the gross requirement of 50 kilos.
Since all the flour was used up the available balance of flour was zero. Hence net requirements of flour in the next month will be
50 Kilos – 20 Kilos = 30Kilos.
Now, imagine the company has used up all the flour and there were 30kilos of flour from a backorder which was also consumed. What will be the net requirement for the next month?
As the company had consumed more than the gross,
50 kilos -(-30 kilos +20 kilos) = 60 kilos
will be the net requirement in the coming month.
The net requirement of a company is also known as the planned order receipts, and it is determined only after netting the available and scheduled arrivals from the gross. The result of this netting is also known as the projected available balance. If the projected available balance is,
- Equal to specified safety stock.
- More than specified safety stock (in case the consumption of flour in one month exceeds the gross).
No net-requirement is planned. If the projected available balance is less than the specified safety stock, a planned order is generated. The planned order schedule is maintained by the MRP system and is also known as planned order receipts.
It is only generated after considering all the scheduled receipts and on-hand stock dated to the required time period.
Scheduled receipt and MRP management
Material requirement planning is a production planning and it is also a stock control system. It helps to keep a balanced inventory and provides required materials when needed. The main objectives of MRP are
- Keep the lowest possible inventory
- Check the availability of components, materials for production, and products for dispatch
- Plan purchase activities, manufacturing activities, and delivery schedules.
Scheduled receipts are an integral part of the materials requirement planning, which is a computer-based inventory and planning control system.
Scheduled receipts in MRP are extremely efficient in systems with complex procedures with complicated billing systems and multiple steps of processing.
MRP makes sure that all the required materials are present in proper quantities and at all times, thus ensuring the smooth functioning of the system.
Other integral parts of the material requirement planning are
- Gross Requirements: These are the requirements needed during every period
- Available Balance: Balanced inventory at the end of each batch
- Net Requirements: Needed to meet requirements and safety stock
- Planned Order Receipt: It arrives at beginning of period
- Planned Order Release: It addresses lead time