It can be frustrating when the recommended order quantities in the App don't quite match what you expect. We'll explain exactly how the Recommended order quantity is calculated, breaking down the variables determining your ordering levels.

The product Inquiry screen is where you'll find the three key sections for order calculation:

Take a look at this example from the product Inquiry screen:

Ideal levels are calculated as follows:

Reorder point and Order up to values convert to units using an item's forecast. For instance, if an item has an Order up to level of 161 days and is entering peak season with a forecast of 17 units per month, that 161 days converts to 90 units. Conversely, if the item is leaving peak season with a forecast of 6 units per month, 161 days converts to 32 units.

It's important to note that an item might have multiple demand streams. An item's Sales forecast is based on its individual sales at a specific location, but a Distribution forecast and/or BOM forecast may also be part of its Total forecast.

You can examine Distribution forecast and BOM forecast further down on the product Inquiry screen under the CW and BOM tabs, respectively.

Net stock units aren't always the same as Stock on hand units. Net stock is calculated as Stock on hand minus any Back orders or Allocated stock plus any Stock on order.

Here's the breakdown:

Available stock = Stock on hand - Back orders - Allocated stock

Net stock = Available stock + On order

Tip: Net stock units will only equal Stock on hand units if there are no Back orders, Allocated stock, or Stock on order for the item.

You can investigate Back orders and Stock on order further down on the product Inquiry screen by reviewing the Sales Orders and Purchase Orders tabs, respectively.

For stocked items, the Ideal order quantity is calculated:

An order is only calculated when Net stock units drop below Reorder point units. For example, if Net stock was 82 and the Reorder point units was 83, an Ideal order quantity of 8 would be calculated (90 minus 82). If Net stock was higher than the Reorder point, no order would be proposed.

Supplier constraints like Minimum order quantity (MOQ) or an Order multiple (OM) can cause the Recommended order to be rounded. For example, if the Order multiple is 16 and the Ideal order was 8, the Recommended order will round up to 16 units. If applicable, Minimum order quantities and Order multiples are found under the Order Recommendation panel.

For Non-stocked items, the Recommended order calculation doesn't use Reorder points or the Order up to level. A Recommended order quantity is generated only if Net stock units drop below zero, calculated to bring Net Stock back to zero. The goal for Non-stocked items is a Net stock position of zero, though Minimum order quantities and Order multiples might result in a positive Net stock.

Obsolete items will never have Recommended order quantities calculated, regardless of Reorder point, Order up to level, and Net stock units.

Once you've reviewed and potentially corrected the variables involved in calculating the Recommended order quantity, you'll likely feel more confident in the proposed order.

You might also be interested in the following: