13.2 Replenishment and DRP

13.2 Replenishment and DRP

Quick Answer: Distribution Requirements Planning (DRP) is the time-phased planning technique that calculates when and how much to replenish each distribution center. Like MRP, it uses gross requirements, scheduled receipts, projected available, and planned order releases—except the “bill of distribution” links DCs and plants for finished goods rather than components.

After the network and push/pull philosophy are set, planners need a systematic way to replenish stocking locations. Domain VIII expects fluency with DRP, how it differs from simple fair-share allocation, and related time-phased order point (TPOP) ideas used when forecasts replace or supplement pure historical reorder points.

From Reorder Point to Time-Phased Replenishment

A classic reorder point (ROP) triggers a fixed or EOQ-sized replenishment when on-hand + on-order falls to a trigger level. That works for independent demand with stable lead time, but multi-echelon distribution with promotions, seasonality, and shared plant capacity needs visibility across periods.

Time-phased methods place demand and supply in buckets (days/weeks) so you can see future projected shortages before they hit. DRP is the distribution analog of MRP:

DRP Logic — Bucket by Bucket

For each SKU at each DC, DRP typically maintains:

1. Gross requirements — forecast, customer orders, or dependent demand from a downstream DC.
2. Scheduled receipts — open replenishment orders already released (in transit or firm).
3. Projected on-hand (projected available) — ending inventory each period after applying receipts and requirements, often after safety stock logic.
4. Net requirements — shortage relative to safety stock or zero policy.
5. Planned order receipts — lot-sized quantity planned to arrive to cover net needs.
6. Planned order releases — receipt date offset by replenishment lead time; these become the supply signal to the upstream source.

Bill of distribution

If Regional DC East is sourced from Central DC, then East’s planned order releases become gross requirements at Central for that SKU. Central’s releases become demand on the plant. This explosion is why DRP can overload a plant if every DC plans independently without capacity or allocation checks—S&OP and master scheduling must still reconcile total supply.

Worked DRP-Style Numeric Sketch

SKU: FG-100
Location: Regional DC West
Order quantity (lot size): 200 units
Safety stock: 40 units
Replenishment lead time: 1 week
Beginning on-hand (start of Week 1): 120 units
Scheduled receipt: 200 units arriving Week 1 (already released)

Weekly gross requirements (forecast):

Step-through (planner logic)

Week 1

• Start: 120
• • Scheduled receipt 200 → available before demand = 320
• − Gross requirements 90 → Projected on-hand = 230
• 230 ≥ safety stock 40 → no new planned receipt

Week 2

• Start 230 − 100 = 130 projected on-hand
• Still above SS → no action

Week 3

• Start 130 − 95 = 35 projected on-hand
• 35 < SS 40 → net need appears. Plan a planned order receipt of 200 (lot size) in Week 3 so projected on-hand becomes 35 + 200 = 235
• Lead time 1 week → planned order release in Week 2 for 200

Week 4 (after applying the Week 3 receipt in the plan)

• From 235 − 110 = 125 → above SS

Week 5

• 125 − 100 = 25 → below SS → planned order receipt 200 in Week 5 → release in Week 4

Compact DRP grid (exam-style)

*After planned receipts covering safety stock policy.

Upstream implication: The plant (or central DC) must be able to ship 200 in Week 2 and Week 4. If plant capacity cannot, planners firm, reschedule, or allocate—DRP reveals the conflict early.

Common calculation traps

• Forgetting to offset receipt by lead time (planning a same-week release when LT ≥ 1).
• Ignoring safety stock (treating net requirements only when projected on-hand goes negative).
• Changing lot size mid-horizon without restating prior planned orders.
• Double-counting a scheduled receipt and a planned receipt for the same need.

Fair-Share vs DRP

Fair-share allocation answers: “We have limited supply now—how do we divide it among DCs?”
DRP answers: “Over the horizon, when will each DC need replenishment, and what should we release?”

Example fair-share (days of supply): Available to allocate = 600. DC A forecast use/day = 40; DC B = 20. To equalize days of supply, give A twice what B gets (400 and 200) so both reach about 10 days. Fair-share does not replace DRP’s Week 3/Week 5 planned releases; it is a shortage response overlay.

Exam tip: if the vignette is about dividing today’s scarce stock, think fair-share. If it is about time-phased DC requirements and plant load, think DRP.

Time-Phased Order Point (TPOP)

TPOP blends order-point control with a planning horizon. Instead of watching only current inventory against a static ROP, the planner (or system) looks at projected inventory using period forecasts and plans replenishments so the projected balance does not breach the order point / safety level in future buckets.

• Useful when demand is independent at the DC but varies by period (seasonality).
• Still typically single-level (this location), whereas full DRP nests locations through the bill of distribution.
• Relates to “planning without a BOM explosion” for distribution independent demand, while still gaining time-phased visibility.

Think of TPOP as: ROP logic + forecast buckets + lead-time offset. DRP extends further when multiple DCs and supplying DCs/plants must be synchronized.

Replenishment Parameters Planners Own

Push, Pull, and DRP Together

DRP can support pull-like behavior when gross requirements are heavily order-driven, or push-like behavior when forecasts and central planned orders dominate. Many systems run DRP, then apply fair-share when the summed DC planned releases exceed available plant supply for a period—DRP proposes need; allocation resolves conflict.

Study Focus

Be able to walk a small DRP table, state where the planned order release lands after lead-time offset, contrast fair-share (scarce supply split) with DRP (time-phased multi-echelon plan), and place TPOP as time-phased independent-demand replenishment without necessarily exploding a full distribution network.