The Fundamentals of DRP (Part 1 of 2)
What does Demand Replenishment Planning (DRP) mean?
DRP, a new feature of Epicor Prophet 21,
is intended for items with long lead times. DRP will take your current
inventory forecast, using UPTO, EOQ, Min/Max or OP/OQ, and forecast out
one year into the future. For example, let’s pick an item with a lead
time of 30 days and over. By creating a forward year, in this case 2013,
the DRP model now will generate forecasts over the forward year to
determine future customer requirements. (However, DRP does not work with
Why is DRP useful to distributors?
will follow your inventory curve. In other words, let’s say the item we
are forecasting has a 90-day lead time. If we create a purchase order
on October 20, the material will not be due in until January 20, 2013.
We don’t need to purchase based on October’s forecast; we need to
purchase based on what we will need in January. Now, if the current
forecast is 200 pieces in October, what will the forecast need to be for
this item in January? Let’s assume some seasonality for this item: in
January, the demand drops off to 100 pieces; therefore, the DRP model
will suggest the purchase of enough material to cover January’s 100
pieces, based on the item’s replenishment method.
One other bonus to DRP is that it will alert you to potential
shortfalls. In the above example, let’s say before the receipt in
January, your net stock will be down to zero or below. DRP gives the
buyer a head’s up to possibly purchase the shortfall before the January
purchase receipt. If the shortfall is not purchased, a sure stock out
In our next blog, we will discuss Future Stock Analysis Queries, Item
Future Forecast Fast Edits, and other DRP functions available for
specific inventory forecast methods.
Posted by Neil VanWalbeck, Senior Professional Services Consultant at Epicor Software