Quick Summary: The Replenishment Cycle (RC) is simply the number of days’ worth of stock you plan to reorder each time you place an order. Optimize inventory holdings by weighing the strategic advantages of long versus short cycles.
Why Replenishment Cycle Matters
Effective inventory management hinges on understanding your replenishment cycles. This critical parameter dictates your ordering frequency and order quantities, directly impacting stock levels and operational efficiency.
What is a Replenishment Cycle (RC)?
An item’s Replenishment Cycle (RC) is a core policy setting, specified in days, that defines the desired time period you want a single order to cover. In simpler terms, it answers: “When I place an order, how many days’ worth of stock do I want to buy?”
This setting is the primary driver of your order quantity. When an order is recommended, the system calculates the required unit quantity by projecting the forecasted demand over the length of the RC. This means:
Every time you order an item, you're ordering X days' worth of stock.
When stock is received, it should last X days until the next batch arrives.
💡 Tip: RC is measured in days, not units. The app converts this to units based on the forecast. So a 30-day RC may mean more units in summer than winter if demand is seasonal.
Examples of Replenishment Cycle Calculation
Example 1: What would the RC be if we sell 100 units per month and we order 200 units at a time?
Answer: RC = 60 days
Example 2: What would the RC be if we sell 100 units per month and we order 50 units at a time?
Answer: RC = 15 days
Long vs. Short Replenishment Cycles Explained
Replenishment Cycle vs. Lead Time Explained
⚠️ Watchouts
A common misconception is that the RC must be set to the same value as the Lead Time. This is not required and is often counterproductive, as it can lead to unnecessarily high inventory levels.
💡 Tips
The Replenishment Cycle is a strategic parameter set by the app user. Adjust it to balance specific goals such as working capital targets, administrative capacity, and warehouse space limitations.
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