Order Calculation
The system dynamically calculates the reorder level and the safety stock, taking the service level, inventory status, lead times, minimum order quantities and the items’ replenishment lead time into account.
The following data influences the order proposal:
- Delivery time (lead time) defines the time from order placement and until delivery. This can be different between suppliers, products and locations. If information available for product per location then that is used, if the information is only listed at product level but not for specific location then that information is used and if it is not listed by product level AGR uses the delivery time defined by the supplier.
- Order frequency defines the time between orders using days as a measurement.
- Order Period for the order is delivery time + order frequency. Because the current order will have to cover demand for that horizon.
- Forecast for the time horizon of the order.
- Safety stock for the time horizon of the order.
- Inventory level is subtracted from the proposal.
- Undelivered Orders are subtracted from the proposal.
- Minimum order quantity. If order quantity is lower than the minimum order quantity it is rounded up.
- Quantity per unit. The order is rounded up to a multiple of quantity per unit.
- MIN/MAX. The order considers if there is some minimum or maximum constrains.
The following illustrates how the system calculates proposals:
