Today we are going to focus on how different Reordering Policy values can affect MRP and consequently, reservations in Business Central. There’s a strong focus on Lot-for-Lot and how to specifically allocate entries to particular reservations. To begin with, I will demonstrate how the Reservation Status field on the Reservation Entry table determines its values. All throughout the post I will demonstrate examples whilst showing other areas, such as item tracking and reservations.
This is the second instalment in the series. Make sure to read the first instalment on reservations in Business Central if you missed it.
Reservation Status values
For this first section, I would like to thank and reference the great work of user MahGah on the Microsoft community forums for explaining when each Reservation Status is applied. This is extremely useful; grasping this area is key to the overall understanding of the Reservation Entry table.
‘Surplus’ occurs where there’s no link between supply and demand on reservation entry lines. For example, if there was stock available but it’s not tied to an existing sales order demand.
‘Reservation’ occurs where there’s a reservation against the stock, usually in the form of a corresponding order. Using Reservation allows you to specifically link supply and demand records together, both manually and automatically. One key benefit of this is it allows users, and the system, to prioritise particular demands over others.
‘Tracking’ occurs where supply has been allocated to a demand. Whilst this would constitute a ‘Reservation’ value, to get a Tracking value you must also have the Item Card’s Order Tracking Policy field value of ‘Tracking Only’ or ‘Tracking & Action Msg.’, or alternatively handle it on the Planning Worksheet lines. For those unaware of the Order Tracking Policy field, we previously wrote about it in our exploration of the Item Card.
Below is a quote on the Reservation and Tracking Reservation Statuses from the Microsoft documentation:
“A reservation is a user-generated link, and an order tracking record is a system-generated link. An item quantity that is entered in the reservation system is either reserved or order tracked, but not both at the same time. How the systems handle an item depends on how the item is set up.”Design Details: Reservation, Order Tracking, and Action Messaging, 02/15/2022
The Tracking Reservation Status relates to reservations which are dynamic. They aren’t rigid unlike entries with a Reservation Status of Reservation.
Lastly, the Tracking status won’t apply to projected demands from forecasts.
‘Prospect’ applies to reservations used for non-order network entities. For example, if you had items with lot or serial tracking parameters on an Item Journal line, this would have a Prospect Reservation Status value on the Reservation Entry table. However, upon entering inventory, this status will change.
Reordering policies and reservations
Next, I will demonstrate the differences that different reordering policies can have on reservations. Dependant on the reordering policy we have for each item, we will see different Reservation Status values. To cover this, I amended the Nimbus 2023 and created reservations reflecting each reordering policy, using the same method as before. I started with varying numbers of sales orders and used the Planning Worksheet to create production orders.
Order may be the most simple Reordering Policy value to understand, so we will start with this. It matches the supply with the demand, replenishing what’s lost. Fortunately, we used this Replenishment System value for the reservation examples above. Due to this, we can move onto the other policies.
Whilst Reservation isn’t strictly for Order reservations, it does apply to all of those as they are exclusively reserved directly. If you manually reserve stock, you will get the same Reservation Status.
Lot-for-lot is where users meet sales demand by both replenishing stock as well as using what’s currently available. When it comes to reservations, the Reservation Status is set to Tracking. Tracking occurs when stock has been allocated to demand. As mentioned earlier, this is dynamic and less specific than Reservation, as the system is just applying availability where it sees it.
In the image below, after creating a sales order for 10 of Nimbus 2023, I generated lines on the Planning Worksheet. Afterwards, I looked at the Reservation Entry table. This was the result:
Note: the Source Type value of 246 reflects Requisition Line.
After this, on the Planning Worksheet, I used the ‘Carry Out Action Message’ function to create a production order. Where there are multiple demands (sales orders), Lot-for-Lot combines all supply into as few supply records (production orders, in this case) as possible. You can see this in the image below. Each sales order has different Source ID values whereas their corresponding production order have the same Source ID. Due to the sales orders being different, these are separate reservations.
As there’s only one production order for three different reservations, it raises the question of how partial consumption affects reservations. More specifically, which reservation line will consumption go against? The basic rule is that the system will apply consumption to the oldest reservations first.
As you can see, Entry No. 2653 is the oldest reservation showing and is for a Quantity of 2. After applying consumption for four finished items, the first entry is fully applied and then the remaining quantity is applied to the next oldest reservation, taking the Quantity (Base) value from 14 to 12. In the image below, notice how after consumption, the Entry No. 2654 which was for 14, is now for 2. There is also a new reservation for the remaining 12. Additionally, notice how the Source ID is now longer there for the supply lines of the first two entries. This is because they’ve been completely consumed, so there’s no longer an associated production Source ID.
Controlling which reservations you amend
Below I am using a new set of data. I created three sales orders, for Quantity: 4, 13 and 17. Again they are all for the Nimbus 2023 item. At this stage in my testing, I could see the system looks to apply entries to the oldest (lowest) Entry No. See my entries below after producing one production order tied to the three sales orders:
As you can see, Entry No. 2665 is the oldest, followed by 2666. Therefore, you’d expect consumption to apply to that entry. However, by amending the Shipment Date value on two of the sales orders, I can change that. By changing this, you can define which reservation entry consumption applies to.
In my example, all three of the sales orders initially had the same key date values. I amended the Shipment Date value on the first two sales orders (101375 and 101376) to be one day later. Now, after posting consumption on the Production Journal for an Output Quantity of 1, you can see the system applied it to the last entry in the list:
Notice the Transferred from Entry No. value on the newest entry reflects the original Entry No. of the Sales Order record.
This means where you use Lot-for-Lot and have multiple sales records tied to a singular production order, you can gain control over your entries. You can dictate which entries to amend. It goes without saying this could be beneficial for those who want total transparency of stock availability.
A little mistake I made
I will admit, this took me two attempts. The first time I tried this, instead of pushing back the Shipment Date on the two Sales Orders back a day, I instead moved the Shipment Date on the one I wanted forward a day. In theory this should work the same. However, as my Released Production Order had a Starting and Ending Date-Time of the same day, this change moved it to before. Obviously you can’t ship goods you haven’t yet created. This therefore broke the reservation in Business Central, meaning I had to start again.
Fixed Reorder Qty.
Let’s now move onto Fixed Reorder Qty, the next reordering policy to cover. The Fixed Reorder Qty. means that when stock falls below a certain threshold, the system suggests reordering a set amount.
When using Fixed Reorder Qty., the Reservation Status is ‘Tracking’, like with Lot-for-Lot.
When using this policy, or Maximum Qty., it’s likely the system will suggest replenishing more than you use. As a result, you will gain stock.
In the example below, I created a sales order for a Quantity: 28
This is the Planning tab on the Item Card. I’ve amended the Planning tab to have obscure numbers, making it easier to see why the Planning Worksheet and consequently the Reservation Entry table are producing the values they are.
After clicking ‘Calculate Regenerative Plan’, the system produced this:
So it works by having as many multiples of the Order Multiple as necessary to put the stock level over the Reorder Quantity value. In this case, that equates to 4×24. The Safety Stock Quantity on the Item Card is 3 and as there’s no stock currently, the system also suggests a separate planning line to reach that minimum value.
As you can see, based on our planning parameters, we end up with more stock than we started with. As 28 satisfies the sales order quantity, the Reservation Entry table lines that relate to excess stock have a Reservation Status of Surplus:
Much like Lot-for-Lot, Fixed Reorder Qty. tries to group the supply into one order where possible.
The Maximum Qty. looks at current demand and suggests reordering an amount which would take the stock quantity back to its maximum.
For this policy, I have three sales orders: one for 12, one for 23 and one for 17. This brings the demand quantity to a total of 52.
When using Maximum Qty., the Reservation Status is ‘Tracking’, like with Lot-for-Lot.
The reason there are so many planning lines is because I set the Maximum Inventory value on the Item Card to 1000. As the Maximum Order Quantity value is 100, it means multiple planning lines are necessary to reach an inventory level of 1000.
The reason the quantities are actually are over the Maximum Over Quantity value is because 100 is actually the highest value possible without additional order multiples. Anything below the Maximum Order Quantity warrants additional multiples. In this instance, 4×24=96. So one more multiple of 24 brings the value over the maximum of 100, specifically to 120.
To explain, 100 is the cap for creation of additional orders. If my Order Multiple value was 25, then the planning line values would cap at 100 because that’s the optimal amount.
For each order quantity, the lines have a Tracking Reservation Status. For all lines set to Surplus, the stock isn’t for specific orders. Instead they either haven’t been allocated to a demand or are intended to keep inventory levels at a good level.
Reservation Status and item tracking
Let’s see what influence item tracking has on reservation entries. To mix it up, I’ll make two new items. One for serial tracking and the other for lot tracking. For both of these, the Reordering Policy value is Order. As both examples include items with a Reordering Policy value of Order, it’s redundant having stock. This is because the system looks to replenish all stock on demand lines, regardless of what’s available already.
Item: 1225, the Probitas Elder Wand is serially tracked.
I created a sales order for a quantity of 100. Using the Planning Worksheet, I generated lines and used the Carry Out Action Message function, creating purchase orders. Each serially tracked item gets its own reservation, with a Reservation Status value of Reservation. I’ve said that word too many times! What this indicates is that there’s a link for each individual item, something you might expect from serial tracking.
Item 1227, the Sorting Hat is lot tracked.
I once again created a sales order for a quantity of 100. At this stage, there’s only one reservation entry line for this item. It shows a Quantity (Base) value of -100 and a Reservation Status of ‘Surplus’, presumably as there’s no supply to match the current demand. After generating lines on the Planning worksheet and using the Carry Out Action Message, the reservation entries are as follows:
Notably, the difference is there’s a corresponding positive quantity line, with the same Entry No. The lines also both now have a Reservation Status value of Reservation, further reinforcing their link.
If I wasn’t using the ‘Order’ Reordering Policy value, would the results be different? In this instance, Order means the supply and demand will match. So if I were to amend this to something else, there’d likely be a greater number of stock coming in than the demand, so there’d be a surplus.
As always, if you got this far, thanks for reading! Reservation entries are one of the backbones of inventory management in Business Central and so are understandably complex. I appreciate you can complicate this area much more, however I tried to keep it at a basic level. For starters, I was handling one order at a time! In practicality, with jam packed Planning Worksheets, it can be difficult to understand and diagnose issues.