Traditional master planning uses the requirement date to calculate when a supply is needed. If there are two demand requirements at the same day, the planner has to decide where it should go to first. Priority based planning helps the planner to determine in which order the inventory has to be allocated to different sources of demand, especially when there is no sufficient on-hand inventory available. The following picture demonstrates a priority based planning scenario.
The picture above shows that the demand cannot be fulfilled entirely through the on-hand inventory available. The question is then to which demand the on-hand inventory has to be allocated. Priority based planning supports the planner answering these questions by assigning priority to the demand based on business rules.
What is the business value of priority based planning?
- Increased service levels
- Lower inventory levels needed
- Optimization of the Supply Chain
Configuration
1.The first parameter to be configured is the priority model. Via the priority calculation method, Dynamics assigns priority to the demand.
| Number | Explanation |
| 1.Name | Name of the planning priority model |
| 2.Description | Description of the planning priority model |
| 3.Priority calculation method | Two calculation methods: Priority ranges > total inventory available as the percentage of the maximum inventory quantity that is set for an item.Percentage of maximum inventory ranges > the priority follows the value that are defined in the planning priority ranges grid (6) |
| 4.Planned order creation | Two planned order creation options: Single supply with the most priority > the planning priority for a planned order is based on the most important priority range. Split according to priority ranges > Split the demand into multiple planned orders based on planning priority ranges |
| 5.Consider demand priority | Set to “Yes” to limit the priority of a new planned order that is created for supply. If you set it to “No”, the priority of the demands will be ignored. |
| 6.Planning priority ranges | The priority ranges |
| 7.Planning priority defaults | Default planning priorities for each type of supply or demand. |
2.The second parameter is the coverage group. The coverage group has a new coverage code called “Priority”. The coverage group has to be linked to the planning priority model.
3.The third important parameter is the item coverage. In the item coverage, the reorder point and the maximum quantity need to be configured. The reorder quantity should be based on the lead time and average daily usage.
Demo
1.For this demo we use item F0008 with item coverage “%Max”. Coverage group “%Max” has been linked to planning priority model “%Max” with calculation method “Percent of Maximum inventory quantity”. Dynamics uses the following formula to calculate the priority: Percentage of maximum = (Net flow position × 100) / Maximum inventory quantity value from the item coverage.
2.Item F00008 has the following on-hand inventory.
3.We run Planning Optimization via the net requirements form for the creation of the planned orders and the assignment of the priority.
4.Based on the calculation method “Percent of Maximum inventory quantity”, Dynamics has assigned the following priorities to the demand. The sales order gets the highest priority, then the transfer for warehouse 12 and the warehouse 11. The reason why warehouse 12 gets more priority then warehouse 11 is, that the actual on-hand inventory for warehouse 12 is less compared to the on-hand inventory of warehouse 11.
| Demand | Requirement quantity | Priority | Actual on-hand inventory |
| Sales order | 100 | 5 | |
| Warehouse 12 | 880 | 12 | 120 |
| Warehouse 11 | 550 | 45 | 450 |
5.For the second demo we use item F0008 with item coverage “PRSingle”. Coverage group “PRSingle” has been linked to planning priority model SimpleSplit with priority calculation method “priority ranges”. This calculation method is more advanced than the percent of maximum inventory quantity. Via the grid “planning priority ranges”, you can configure the rules for the priority assignment in relation to the reorder points and maximum inventory.
6.Item F00017 has the following on-hand inventory.
7.We run Planning Optimization via the net requirements form for the creation of the planned orders and the assignment of priority.
8.Based on the calculation method “priority ranges”, Dynamics has assigned priorities to the demand below as follows. The purchase order gets the highest priority, then the sales order, and then the transfer orders for warehouse 12 and warehouse 11. The transfer order for warehouse 12 gets more priority, as the requirement quantity is between zero and the minimum inventory quantity (200).
| Supply and demand | Requirement quantity | Priority | Actual on-hand inventory |
| Planned purchase order | 880 | 1 | |
| Sales order | 100 | 5 | 650 |
| Warehouse 12 | 880 | 30 | 120 |
| Warehouse 11 | 550 | 50 | 450 |
Dynamics 365 Supply Chain Management 