Effective Inventory
The system calculates the inventory that is going to be used in the rest of the calculations.
Effective Inventory =
Inventory
+ Quantity on Purchase Order
- Quantity on Sales Order
+ Quantity in Transfer In
- Quantity in Transfer Out
Note: It is possible to set up which document types (Purchase Order, Sales Order, ...) should be considered in the calculation. This can be done in the Replen. Setup page, in the Effective Inventory FastTab.
Average Daily Sale
The Average Daily Sale is not calculated as in the method Average Usage. The value of the field Manual Estimated Daily Sales is used as the Average Daily Sale.
Stock Cover Days
If Stock Coverage Days Profile is used, the Stock Cover Days are dynamically calculated based on the next replenishment calculation day, and the parameters as defined in the Replen. Coverage Days Profile. The Warehouse Stock Cover Days and Store Stock Cover Days are calculated as follows:
Warehouse Stock Cover Days = No. of Days until Next Calculation Day - Warehouse Closing Days + Inbound Whse. Handling Time + Coverage Buffer Days
Store Stock Cover Days = No. of days until Next Calculation Day - Store Closing Days + Inbound Store Handling Time + Coverage Buffer Days
If Stock Coverage Days Profile is not used, the system will use the Wareh Stock Cover Reqd (Days) field to replenish a warehouse and will use the Store Stock Cover Reqd (Days) field to replenish a store.
Stock Cover Days = Store Stock Cover Reqd (Days) -or- Stock Cover Days = Wareh Stock Cover Reqd (Days)
Note: When replenishing a warehouse, the system tries to use the Wareh Coverage Days Profile, or the Wareh Stock Cover Reqd (Days) field, if the profile for the warehouse is not defined. If both of them are empty, the system will look for the Store Coverage Days Profile, or finally, the Store Stock Cover Reqd (Days) field, if the profile for the store is not defined.
See Also: Replen. Coverage Days Profile, Replenishment Batch Calculation Calendar.
Cross Docking
If the Journal is to replenish the warehouse with cross docking to the stores, it is necessary to calculate how much should be cross-docked to the stores.
The regular Journal process calculates the System Suggested Quantity according to the Warehouse Stock Cover Days as the Journal replenishes the warehouse.
This additional process calculates the Quantity to Cross Dock for the store using the Store Stock Cover Days.
Quantity to Cross Dock = Average Daily Sales * Store Stock Cover Days - Effective Inventory
Example:
Condition:
- The warehouse has 8 days as Stock Coverage but the store has 3. The system calculates how much the store needs for 10 days.
- Average Daily Sale = 10
- Store Stock Cover Days = 3
- Warehouse Stock Cover Days = 8
- Forward Sale Forecast Factor = 1,1
- Effective Inventory = 5
Result:
- Quantity to Cross Dock = (10 * 3) - 5 = 25
- System Suggested Quantity = (10 * 8 * 1,1) - 5 = 83
- The Quantity in the Purchase Order for the warehouse is 83 but when the Purchase Order is received into the warehouse, the staff cross-dock (pick) the 25 to be delivered by a Transfer Order to the store.
Note: If there is any Planned Sales Demand within the store stock cover period, the Quantity to Cross Dock is adjusted to reflect the Planned Sales Demand.
Suggested Quantity
The system can suggest the quantity that the warehouse or the store needs according to the following formula:
System Suggested Quantity = Average Daily Sales * Required Stock Cover Days * Forward Sales Forecast Factor - Effective Inventory
If the System Suggested Quantity is less than zero, the System Suggested Quantity is set to zero.
If the Effective Inventory is greater or equal to the System Suggested Quantity, the System Suggested Quantity is set to Zero.
Note: If there is any Planned Sales Demand within the required stock cover period, the System Suggested Quantity is adjusted to reflect the Planned Sales Demand.
Planned Sales Demand
If there are Planned Sales Demand records for the required stock cover period (warehouse or store), the system sums the quantities from the Planned Sales Demand records, and the System Suggested Quantity will be adjusted to include the Planned Sales Demand quantity.
Demand Quantity = Average Daily Sale * (Required Stock Cover Days – No of Planned Sales Demand Days) + Total Planned Sales Demand Quantity
System Suggested Quantity = Demand Quantity * Forward Sales Forecast Factor - Effective Inventory
Note: Quantity to Cross Dock will also be adjusted if there are Planned Sales Demands within the store stock cover period.
See Also: Planned Sales Demand