This method applies where the Journal calculates quantity for Transfer Orders or Purchase Orders where the stock level need is arrived at from the stores and not the warehouse itself.
If a Replenishment Data record exists of the type stock level for the warehouse, and the journal is creating a purchase order for the warehouse, the system will use the process described in Calculation Process for Stock Levels – Warehouse.
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
Reorder Point
If the field Reorder Point is greater than zero and System Suggested Quantity is less than the Reorder Point, then the System Suggested Quantity is set to Reorder Point and Decision is set to Brought up to Reorder Point.
Condition:
System Suggested Quantity < Reorder Point
Result:
System Suggested Quantity = Reorder Point
Maximum Inventory
The field Maximum Inventory works together with the Reorder Point field. Only if the current Effective Inventory is below or equal to the Reorder Point, will the system proceed to calculate the System Suggested Quantity.
If the Maximum Inventory is set larger than the Reorder Point, the system will bring the System Suggested Quantity up to the Maximum Inventory. Otherwise, the system will bring the System Suggested Quantity up to the Reorder Point.
The Decision is set to Brought up to Maximum Inventory.
Condition:
Effective Inventory <= Reorder Point
Result:
Condition:
Maximum Inventory > Reorder Point
Result:
System Suggested Quantity = Maximum Inventory – Effective Inventory
Condition:
Maximum Inventory <= Reorder Point
Result:
System Suggested Quantity = Reorder Point – Effective Inventory
Note: If you are using Multiples for the Purchase Orders, it is good practice to set up the Reorder Point (and also Maximum Inventory, if used) as a multiple of the Order Multiple field.
For example, the Order Multiple is set to 4 (you can only order from the vendor in multiples of 4 like 4,8,12 and so on). In that case, it is always good to have the Reorder Point or Maximum Inventory set to a multiple of 4 as well.
Cross Dock
If the Journal is to replenish the warehouse with cross docking to the stores and Quantity to Cross Dock is higher than System Suggested Quantity, the Quantity to Cross Dock is set to System Suggested Quantity.
Condition:
Purchase Order for warehouse with cross docking
Quantity to Cross Dock > System Suggested Quantity
Result:
Quantity to Cross Dock = System Suggested Quantity