MRP Demand Smoothing
This article is related specifically to companies using Anytime Supply Chain software with Sage 500 ERP which limits demand adjustments (future adjustments or forecasts) to the inventory calendar.
Companies using Anytime Supply Chain software with Sage 500 should utilize the Sage 500 MRP Demand Smoothing feature so that demand and safety stock levels are allocated to (or planned within) the appropriate MRP planning software periods .
For example, future demand for an item may be defined in the Sage 500 ERP system for 100 units for the inventory period. If the inventory calendar is setup by month then what happens when with this demand when you’re planning in weekly buckets for the month? In the case of Sage 500, the 100 unit forecast is put on the first day of the first week in the plan.
But this is not realistic as the 100 unit demand will likely hit over the course of the month. It’s best to spread, or to smooth, this demand over the different planning periods. If there are four weeks in the MRP software period for the inventory calendar then each week will result in demand plans of 25 units each which is what most people would expect. This is why Sage 500 includes the Demand Smoothing feature.
Note that the smoothing process may result in decimal values if the number is not equally divisible. Many companies cannot produce or buy a fraction of an item. In these cases, Anytime Supply Chain software will look to the item record to determine if the item allows decimals or if it must be purchased, transferred, or manufactured in whole quantities. Any suggested orders will then be rounded up to the nearest whole value.
It’s important to note that smoothing may be important even when you are not using demand forecasts since safety stock software requirements are also smoothed over the periods in the MRP software plan.
e2b teknologies is the original developer of Sage 500 MRP software. The Company continues to develop new features for Sage 500 MRP software and now offers Anytime Supply Chain software, the next-generation cloud MRP software and cloud DRP software is available for Sage 500, Sage 300, Sage 100, Intacct Financials, Intuit QuickBooks, and other accounting and ERP business applications.