MRP does work the way you described and that is common in other systems I have used. You could say this is incorrect and that it should suggest the order when the reorder point is hit but I doubt Sage will change it.
FWIW here is the spiel I give clients: Reorder points are best used for items where the demand is not forecasted and where demand visibility is limited. An example would be a retail or web store where there are random customers who make purchases - there is a sales history that can be used to calculate the reorder point but no recurring customers who have future deliveries on order. In theory if there is enough quantity in the reorder point to cover historical demand for the product lead time plus one week for cushion MRP isn't needed. Just use the reorder report, order when something falls below the reorder point and it will arrive before you run out.
When there is a forecast or demand visibility in the form of orders scheduled for future deliveries MRP "time phases" the supplies and demands and as you said recommends PO delivery when the quantity goes below the reorder point. This usually causes extra inventory to be on hand. For situations like this the reorder point can be used for a "safety stock" to provide some cushion for unexpected demand but not to cover the entire lead time of the item. That usually means the reorder point is lower because the purpose has changed.
I also tell clients that reorder points are not "set it and forget it" no matter how they are used. They should be reviewed and updated regularly or excess inventory will result. If I had a nickel for every time someone said "MRP told me to order 500 of those and I have only sold 5 this year" when that sale caused the on-hand to drop below the reorder point that was set 10 years ago....
I hope all that helps, let me know if there is anything I can clarify.
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Bernie Lehman
Partner
Lehman Wesley & Associates
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