Time-Phased Order Point (TPOP) is an inventory planning method that applies MRP-style time-phased logic to independent demand items. Instead of triggering orders when inventory hits a static reorder point, TPOP projects inventory forward period by period, considering forecasted demand and scheduled receipts, and generates planned orders only when projected inventory will fall below zero or safety stock.
At User Solutions we see TPOP as the bridge between simple reorder-point systems and full MRP — giving manufacturers time-phased visibility for finished goods and service parts that do not have a parent BOM to drive their planning.
How Time-Phased Order Point Works
TPOP uses the same planning grid as MRP but substitutes forecast demand for BOM-driven dependent demand:
- Load demand forecasts into time buckets across the planning horizon.
- Add any known customer orders that consume the forecast.
- Subtract demand from projected on-hand inventory period by period.
- When projected inventory drops below safety stock, generate a planned order.
- Offset by lead time to determine the order release date.
- Apply lot sizing to determine order quantity.
The result is the same time-phased output that MRP produces — but driven by forecast instead of BOM explosion.
TPOP Example
A manufacturer stocks finished product FP-200 (industrial pump). Planning data:
- On-hand inventory: 180 units
- Safety stock: 50 units
- Lead time: 2 weeks
- Lot sizing: EOQ of 200
| Week 1 | Week 2 | Week 3 | Week 4 | Week 5 | Week 6 | |
|---|---|---|---|---|---|---|
| Forecast Demand | 40 | 45 | 50 | 40 | 55 | 45 |
| Customer Orders | 35 | 20 | 10 | 0 | 0 | 0 |
| Net Demand | 40 | 45 | 50 | 40 | 55 | 45 |
| Projected On-Hand | 140 | 95 | 45 | 5 | -50 | -95 |
Projected on-hand drops to 45 in Week 3 — below safety stock of 50. TPOP triggers a planned order:
- Order quantity: 200 (EOQ)
- Need date: Week 3
- Release date: Week 1 (offset by 2-week lead time)
After the planned receipt:
| Week 1 | Week 2 | Week 3 | Week 4 | Week 5 | Week 6 | |
|---|---|---|---|---|---|---|
| Projected On-Hand | 140 | 95 | 245 | 205 | 150 | 105 |
Inventory stays above safety stock throughout. Compare this with a static reorder point of 120: the traditional method would have triggered an order in Week 2 when on-hand hit 95 — one week later than TPOP's time-phased view detected the problem.
Why TPOP Matters for Scheduling
Provides forward visibility for finished goods. TPOP shows when replenishment production or purchasing must start for finished goods, giving scheduling tools like Resource Manager DB the lead time needed to plan capacity.
More precise than reorder points. TPOP considers the timing and magnitude of future demand, not just the current inventory level. This prevents both premature ordering (when a dip is temporary) and late ordering (when demand is accelerating).
Integrates with MRP. TPOP-generated planned production orders for finished goods feed into MRP as the master production schedule, which then explodes BOMs for components. The two methods work together seamlessly.
Reduces finished goods inventory. By ordering based on projected need rather than fixed triggers, TPOP avoids the chronic over-ordering that static reorder points produce when demand is variable.
Related Terms
- Independent Demand — The demand type that TPOP is designed to plan, driven by forecasts and customer orders.
- Safety Stock — The buffer level that TPOP uses as its minimum inventory threshold.
- Material Requirements Planning (MRP) — The planning method for dependent demand items that complements TPOP for independent demand.
FAQ
Traditional reorder point triggers an order when inventory drops below a fixed level, ignoring when future demand occurs. Time-phased order point uses MRP-style time-phased planning to project inventory period by period, ordering only when projected inventory will fall below zero or safety stock. TPOP is more precise because it considers the timing of known demand.
TPOP is best for independent demand items — finished goods and service parts — where demand comes from forecasts rather than BOM explosion. MRP handles dependent demand items (components) whose requirements are calculated from parent orders. Many systems use MRP for dependent demand and TPOP for independent demand items.
Yes. TPOP uses safety stock the same way MRP does — as a minimum inventory floor. When projected on-hand inventory would drop below the safety stock level, TPOP generates a planned order to replenish, offset by the item's lead time.
This term is part of the Manufacturing Glossary. For a deep dive into material planning, see our MRP Guide.
Frequently Asked Questions
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