Statistical Reordering

Periodic replenishment method

The periodic replenishment method is used to determine a variable quantity suggestion for a date set according to certain criteria.

During the calculation, the system proposes a suggestion that is based on the following elements:

  date of the last process,
  maximum stock,
  physical stock,
  stock with status Q,
  allocated stock (global, detailed, shortage),
  stock in firm order.

The suggestion is determined in the following way:
Suggestion = Maximum stock – available stock – stock on order

The available stock corresponds to the physical stock minus the allocated stock (global, detailed, missing) and increased by the stock with status Q.

The products managed by replenishment period that are not involved with the current process (date of the last process + periodicity greater than the current date) are processed by the reorder threshold method if they are in shortage.

Example of the periodic replenishment method

Product A
Frequency: 7 Calendar days
Maximum stock: 5000 pieces

A	Q	R	Allocated	Available stock	Shortage	On order	Suggestions
900	0	0	900	0	0	5500	0
900	0	0	0	900	0	0	4,100
900	0	100	800	100	0	400	4,500
900	500	200	900	0	200	0	5,200
900	500	200	900	0	200	400	4,800
1,300	500	200	900	400	200	0	4,800
900	500	200	900	0	200	1,500	3,700

Reorder threshold method

The reorder threshold method is used to create a suggestion for a fixed quantity when the order point is reached.

This method takes into account a certain number of elements:

  the economic quantity (Replenishment lot),
  the replenishment threshold (order point),
  the available stock
  the stock in quality control,
  the stock on order,
  the allocated stock (detail, global, shortage).

There will be a suggestion when the calculation (Available stock + Stock on order) becomes less than the reorder threshold.

The available stock corresponds to the physical stock minus the allocated stock (global, detailed, missing) and increased by the stock with status Q.

The system then generates a suggestion at economic lot level.

If the economic lot does not lead to achieving the replenishment threshold, then the system generates a suggestion for a quantity equal to the replenishment threshold - (available stock + stock on order).

Example of the replenishment threshold method (Reorder point method)

Product A
Replenishment threshold : 1,000
Economic lot : 5,000

A	Q	R	Allocated	Available stock	Shortage	On order	Suggestions
900	0	0	0	900	0	5,000	0
900	0	100	800	100	0	5,000	0
900	500	200	900	0	200	1,200	0
900	500	200	900	0	200	800	5,000
1,300	500	200	900	0	200	800	5,000
900	500	200	900	0	200	0	5,000

Header information

The header information includes the specification of the site. The site shown by default corresponds to the site associated with the user.

Process selection criteria

The processing can be used:

• either in the calculation of the reorder point,
• or in the calculation of the periodic replenishment (or both simultaneously).

The calculation can be performed:

• based on the data of the product-site record,
• based on the calculated date.

It is possible to carry out the calculation and the updating of the calculated data without creating a reorder request.
It is also possible to carry out the process from the data previously calculated without modifying any of these. It is then required to:

• specify the calculated date of the product record as calculation basis,
• uncheck all calculation selections.

Calculation selection

For the running of a process from the calculated data, it is necessary to choose the various data that will be updated.
This calculation uses a consumption history that is itself generated by the periodic process function.

Safety stock calculation

The safety stock calculation is conducted based on an average consumption for a determined period.
The calculation uses the following formula: Safety stock = K*sigma*SQR(Lead time)

K is a constant that depends on the product service rate.
Sigma represents the variance type of the consumption over the calculation period.
Lead time represents the reorder or production lead time expressed in the product-site record.

Service rate for classes A, B or C

For each class, the service rate needs to be specified (coefficient expressed in percentage).
The relationship between the service rate and the coefficient is expressed in the Safety stock coefficient table.

Replenishment threshold (order point)

The reorder point calculation is based on an average consumption for a given period.

The reorder point method uses the following formula:
Reorder point = (Average daily consumption * reorder lead-time) + Safety stock.

 Economic quantity

The calculation of the economic quantity is based on a consumption over a given period. The economic quantity calculation uses the Wilson formula: 

Economic quantity = Ö (2*R*Oc/(I*Uc))

D: represents the requirement over the period
Oc: Cost of processing an order
A: Stock holding rate
Uc: Unit cost

 Maximum stock

The maximum stock is linked to the products that are the object of a periodic replenishment. It is calculated in the following way:
Max stock = average daily consumption * (reorder lead time + periodicity between two replenishments)

Class selection

It is possible to carry out the process for a product class type (A, B, C)

Selection by range

It is possible to select products by:

  product ranges,
  categories,
  planner code,
  product statistical groups. 

Process log file

There are two log files possible depending on the process (after confirmation using the [OK] button). The log file opens. This file can be printed using the [Print] button.

The log displays a list, according to the requested criteria:

• products awaiting replenishment,
• results of calculation data,
• errors.