Some companies would like to use the Re-Order Point Report to calculate the quantities needed for stock. The Re-Order Point Report will provide you with a listing of products that are needed for stock based on Re-Order Points. It also has the option of proposing an order based on the maximum quantities to stock that is in each Inventory Record.
Not having Re-Order Points and or Maximum Quantities set up the Inventory Master Records can be an obstacle to using the Re-Order Point Report. This selection will calculate the Re-Order Point and Max Qty to Stock for you, based on past sales history.
You can select the range of Products you would like to calculate these quantities for by Product Code, Description, Classification or Alternate Product Code. This gives you the flexibility of calculating different quantities of items based on movement and lead-time.
There is an option to include Non-Stock items. Typically you would not include Non-Stock items since they are not specific parts.
You also have the option of calculating either the Re-Order Point or the Maximum Qty to Stock or both.
The screen will first prompt you for the Re-Order Point information.
Re-Order Objective – This is the period of usage you would like to achieve. It is calculated in months you can enter 3 for 3 months or .5 for half of a month.
You will then enter the Beginning History Period and Ending History Period. Keep in mind you can re-calculate these at any time. If you wanted to consider the last 6 months and it was currently March, you might enter a Beginning History Period of 9-01-01 and Ending History Period of 2-28-02. The system would then calculate the total sales for that period. If the total Sales for that period for an item was 1000 units that would be 166.66 units per month. If you entered 3 months for the Re-Order Objective the quantity calculated would be 500. If you entered .5 months for the Re-Order Point quantity calculated would be 83.
You will then answer a confirming question indicating that you would like to calculate the Re-Order Point.
The next selection is for the Maximum Qty to Stock. You will answer similar questions if you would also like to calculate the Maximum Qty to Stock. The Maximum Qty to Stock objective would need to be a longer period of time to be used on the Re-Order Point Report.
The Re-Order Point Report uses the Re-Order Point quantity as a trigger indicating that it is time to re-order a product. The report can suggest that you order up to the Re-Order Point. It can also be used more effectively by suggesting that you order up to the Maximum Qty to Stock. As an example, your Re-Order Point might be 3 months and the Max Qty to Stock might be 4 months.
After you have entered all of the information, the system will provide you with a listing of the products that you have selected. It will show the current Re-Order and Max Qty’s as well as the new suggested quantity based on the criteria that you entered. If you currently have quantities set up, the report will also show the percentage of variance from the old value to the new value. This report also gives you the option of skipping items with a variance below a certain level e.g. Skip items with a variance less than or equal to 10 percent. This way, if you are updating current quantities you only have to review items with larger variances.
If you are satisfied with the quantities on the report you can answer Yes to Update.