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Item and Bill of Material Attributes

Planning recommendations are created based on many different bill of material and item attributes. Shrinkage rates, component yield and safety stock are some examples of attributes that affect the outcome of the planning process. There are various bill of material and item attributes that you can use to adjust the planning recommendations so that they conform to your manufacturing policies.

Standard Bills and Routings Only

For planned orders, only standard bills and routings are planned. Alternate bills or routings are not considered. For a discrete job, you may specify an alternate bill and/or routing. The planning process sees component requirements of the alternate routing for that job.

Phantom Bills of Material

A phantom bill (also known as a phantom assembly) describes a normally non-stocked assembly or subassembly. One purpose of a phantom bill of material is to allow you to manufacture and stock the assembly when necessary. You can use phantoms, for example, to build and stock occasional spares for field service requirements.

When you implement planned orders for the parent of the phantom, Oracle Work in Process blows through the phantom and creates requirements for its components, ignoring any on-hand quantities of the phantom. Typically you set the lead time of the phantom to zero to avoid any additional lead time offset for the components.

Oracle Master Scheduling/MRP and Supply Chain Planning uses the bill of material attribute to determine a phantom. Instead of passing the parent's planned orders to the phantom, netting the phantom and passing requirements to the phantom's components, the engine blows through the phantom to create component planned orders.

Using the bill of material attribute to determine phantoms has two advantages: it allows for more flexibility, since a component can be a phantom in one bill and not another, and it makes treatment of phantoms in Oracle Master Scheduling/MRP consistent with Oracle Work in Process.

Manufactured or Purchased

Three item attributes are evaluated to determine if planned orders are generated and implemented into discrete jobs, repetitive schedules, or purchase requisitions.

Supply Chain Planning users can supplement and refine this behavior with sourcing rules and bills of distribution. See: Sourcing Rules and Bills of Distribution.

Make or Buy

This item attribute determines how the item is planned. The planning process looks at the Make or Buy item attribute to determine whether to generate component requirements. The attribute can have a value of Make or Buy and is directly related to the Build in WIP and Purchasable item attributes.

When implementing orders via the Planner Workbench, the make or buy attribute is used as the default for the type of planned order you can implement, either purchased or manufactured.

Build in WIP

This item attribute establishes if the item can be manufactured.


This item attribute allows you to establish whether the item can be placed on purchase orders or requisitions.

The following table illustrates the impact of these item attributes on the planning process:

Make or Buy Build in WIP Purchasable Planning Recommendation
Make Yes No Plan manufactured planned orders when needed and pass down component demand. You can only implement discrete jobs or repetitive schedules for this item. Purchase orders or requistions cannot be created.
Make Yes Yes Plan manufactured planned orders when necessary and pass down component demand. When implementing planning recommendations you have the option to implement a manufactured order (default) or a purchase requistion.
Buy No Yes Plan purchase requisitons when needed and do not pass down component demand. You can only implement purchase requistions for this item. Discrete jobs or repetitive schedules cannot be created.
Buy Yes Yes Plan purchase requistions when needed and do not pass down component demand. When implementing planning recommendations you have the option to implement a purchase requistion (default) or a manufactured order.

Bulk Items

Bulk items are those you issue in bulk to work in process, to cover a period of time, or to fill a fixed size container. Normally, you do not issue these items to specific discrete jobs or repetitive schedules.

You might designate an item as Bulk for many reasons. Perhaps it is not cost effective to transact these items for each individual job or schedule. Or, a bulk item might be easier to manage if you place a large quantity in a central floor stock location.

For example, bulk items might be nuts, bolts, and other hardware used in the manufacturing process. You issue quantities of 10,000, for instance, to a floor stock location using the account issue transaction provided by Oracle Inventory. Work in process obtains the hardware from floor stock when needed. By making this hardware available in floor stock, and not pushing or pulling it to each job or schedule, you can save the cost of performing additional transactions.

The planning process creates planned demand for bulk items by exploding their usage on a bill of material. It creates recommendations to replenish bulk material based on these demands and considering any on-hand inventory for the item. Note that when you issue the material to the floor stock location, it is no longer seen as available supply. During the planning cycle, the need for bulk items according to the material plan rise and fall based on the timing of issues from nettable subinventories to the expense account.

Suggestion: Designate a general ledger expense account as Floor stock. Periodically issue large quantities of bulk items to this account.

Shrinkage Rate

For a particular inventory item, you can define a shrinkage rate to describe expected scrap or other loss. Using this factor, the planning process creates additional demand for shrinkage requirements for the item to compensate for the loss and maintain supply.

For example, if you have a demand of 100 and a discrete job for 60, the planning process would suggest a planned order for 40 to meet the net requirements, assuming no shrinkage rate exists.

With a shrinkage rate of .2 (20%), Oracle Master Scheduling/MRP and Supply Chain Planning assumes you lose 20% of any current discrete jobs and 20% of any suggested planned orders. In this example, since you have a discrete job for 60, assume you lose 20% of that discrete job, or 60 times 20%, or 12 units. The net supply from the discrete job is 48. Since you have a total demand of 100 and supply of 48, you have a net requirement of 52 units. Instead of suggesting a planned order for 52, the planning process has to consider that 20% of that planned order is also lost to shrinkage.

The planning process creates additional demand called shrinkage demand to create an increased suggested planned order to provide for the lost supply. The planning process inflates the planned order of 52 by dividing 52 by (1 - .2) = 65.

With the a shrinkage rate of .2, the planning process would result in:

Component Yield

Component yield is the percentage of a component on a bill of material that survives the manufacturing process. A yield factor of 0.90 indicates that only 90% of the usage quantity of the component on the bill actually survives to be incorporated into the finished assembly.

To account for the loss, the planning process inflates the demand quantities for the component (similar in concept to shrink factor). To increase demand, the usage quantity is divided by the yield factor.

For example, when you define the component usage quantity as 2 and the component yield as 0.90, the usage is recalculated as 2 divided by 0.90, or 2.22.

Safety Stock

Safety stock is a quantity of stock you plan to remain in inventory to protect against fluctuations in demand or supply. Safety stock is sometimes referred to as overplanning, forecast, or a market hedge. In the context of master scheduling, safety stock refers to additional inventory planned as protection against forecast errors or short term changes in the backlog. You can specify safety stock days together with safety stock percent as item attributes in Oracle Inventory.

You establish the default use of safety stock calculation when you define your planning parameters. You can override this option for individual material plans when you generate an MRP or MPS using the Launch window. See: Defining Planning Parameters and Launching the Planning Process.

When launching the planning process, you can choose whether to calculate safety stock when generating suggested planned orders and repetitive schedules in the Plan Options window. If you choose to run the planning process with the safety stock option, Oracle Master Scheduling/MRP looks at each item to determine the method of safety stock calculation. You can define safety stock methods for each item using in Oracle Inventory. See: Entering and Reloading Item Safety Stocks.

MRP Planned Percent

If you choose a safety stock method of MRP planned percent for an item, safety stock is dynamically calculated during the planning process.

For discretely manufactured items, the safety stock quantity is dynamically calculated by multiplying the safety stock percentage you define by the average of gross requirements for a period of time defined by the safety stock days.

For repetitively manufactured items, the planning process multiplies the percentage you define by the average daily demand for a given repetitive planning period. The planning process recalculates the safety stock quantity for each repetitive period in the planning horizon.

Inventory Methods

Oracle Inventory provides several different methods for calculating safety stock. See: Entering and Reloading Item Safety Stocks.

The following methods are available within Oracle Inventory for calculating safety stock and are used during the planning process if your safety stock method is Non-MRP planned:

Mean absolute deviation (MAD) Calculate safety stock as the mean absolute deviation (MAD).
User-defined percentage Calculate safety stock using the percentage you define times the average monthly demand.
User-defined quantity Use a fixed safety stock quantity you define.
Safety stock quantities generated in Oracle Inventory according to effectivity dates are included in planning. Instead of manually changing the user-defined safety stock quantity each time a change is needed, the user can now set effectivity dates for when a change in quantity takes place.

Lot Expirations

For items under lot control, you can define the shelf life of lots that controls when the lot expires. The planning process tracks lots and their expiration dates. If the expiration date for a lot occurs before the lot is used to satisfy gross requirements, the unused portion of the lot as expired is considered. An expired lot gross requirement is created to offset any remaining portion of the expired inventory lot.

For example, the following item has a quantity on hand of 300 that consists of 3 lots of 100 each, due to expire on days 5, 10, and 15 respectively. The item has gross requirements of 150 on day 4 and 50 on day 12. The plan would look as follows:

Beginning QOH = 300 Demand Type Quantity Projected QOH
Day 4 Gross requirement 150 150
Day 10 Lot expiration 50 100
Day 12 Gross requirement 50 50

Only 50 units from the second inventory lot were used before they were due to expire on Day 10. Therefore, a gross requirement with a type of lot expiration to offset the quantity of the inventory lot that is projected to expire is created.

See Also

Implementing Planned Orders


Creating a Bill of Material

Defining Items

Overview of Material Control

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