The Suggested Order List is useful for sites that maintain an in-house inventory of items at one or more asset locations. The ERP response formula is used to determine if an item needs to be reordered and what the Order Quantity should be. The response formula calculates the suggested Order Quantity for each item based on the information maintained for that item in the inventory at a particular asset location.
When the response formula determines that an item's available-to-issue quantity has dropped too low (equal to or less than the order point), the system puts the item on a purchase order and on a report — the Suggested Order List (SOL). The Suggested Order List shows the quantity of items needed for purchase, along with other stock level statistics.
In balance, for system-generated POs, the system reduces the Order Quantity of a stock item when the item's available quantity increases as a result of several activities. The activities include:
Note: Available Quantity equals On Hand Quantity (which physically exists in inventory) minus Allocated Quantity (quantity that has already been promised to outstanding requisitions).
When available quantity increases as a result of any of these activities, the system subtracts the quantity increase from the Ordered Quantity for purchase order lines. (The decrease in ordered quantity affects purchase orders that are regular and unauthorized, have not been manually adjusted, and are not Direct Delivery.)
If a decrease reduces a PO line's Ordered Quantity to zero, the system deletes the PO line. A System Note is written to any changed PO line. A System Note is also written to any PO where a line is deleted.
The general Suggested Order List (for all vendors) is available from the Supply Chain (Materials Management) Reports menu. The Suggested Order List for any vendor is available from the menu next to the vendor on the Vendors list.
The Excel worksheet linked here shows you how to calculate the response formula described in the following section, if you want to try some sample calculations yourself.
A flowchart is available that depicts how the system calculates various statistics (minimum stock quantity, reorder points, optimum order quantity, etc.). These calculations are used to generate the Suggested Order List. Click here to view the flowchart.
The sample Suggested Order List, run for a single vendor, shows rows of data for a purchase order (PO 4850) containing the item 0204061T. The Suggested Order List for a vendor may contain multiple purchase orders. The number of purchase orders depends on the items ordered and on the requirements of the ordering department or vendor if, for example, separate purchase orders by department are used. A detailed discussion of the report is contained in the following sections.
For each purchase order, the report shows the PO Number and PO Type, Asset Loc for the items, Vendor Name and Buy-From Location Name, Buyer, and a minimum order dollar amount. If the vendor has no minimum, the Minimum Order field is $0.00.
The first two rows for each item listed on the SOL contain item record information. In the example, look at the blue shaded area which displays the item 0204061T on the SOL.
Beginning at the left, the first row contains:
Returning to the left with the next row, fields show:
The third row (beginning on the left) contains order quantities and stock statistics (described next) from the response formula.
Reorder Point - MSQ or SSQ
Reorder Point Calculation
If: Minimum Stock Quantity > Safety Stock Quantity
Then: Reorder Point = Minimum Stock Quantity
Otherwise: Reorder Point = Safety Stock Quantity
If: Both the Safety Stock Quantity and the Minimum Stock Quantity are zero
Then: The Reorder Point is 1.
The calculation of MSQ is:
If: Days Between Delivery >
0
Then: Minimum Stock Quantity = Days Between Delivery * Average Daily Usage
Otherwise: Minimum Stock Quantity = PipeLine Days * Average Daily Usage
Safety Stock Quantity - The minimum acceptable stock quantity
for an item. The Safety Stock Quantity
is a value that your Materials Manager or system administrator sets on the item record.
When the Reorder Point is equal to the Safety Stock Quantity, the system
prints "SSQ" in bold type.
The Optimum Quantity Percent is used to calculate the Optimum Quantity Factor.
The Optimum Quantity Percent is a value that your materials management group must enter manually. This value defines an optimum stock level percentage that modifies the reorder point as additional safety stock. It is an added "safety margin" that your site may wish to specify. The Optimum Quantity Percent is entered for both the asset location and the item itself. The entry for the item takes precedence.
If: Item Optimum Quantity Percent = 0
Then: Optimum Quantity Factor = (Asset
Location Optimum Percent / 100) + 1
Else: Optimum Quantity Factor = ( Item Optimum
Quantity Factor / 100) + 1
Optimum Quantity = Reorder Point * Optimum Quantity Factor
BO: Backordered Quantity - The total quantity of the item on backorder to all departments, within the current Asset Location. In the example for item 0204061STT, BO is 0.
OOA:
On Order Authorized quantity - The total quantity of the item on purchase
orders that are authorized, but not yet received.
The OOA value in the example for item 0204061STT is 20 .
OON:
On Order Not Authorized quantity - The total quantity of the item on
purchase orders that are not authorized.
The OON value for item 0204061STT in the example is 0.
PLD:
Pipeline Days - The number of days between the created date on
a PO for the item and the initial receipt date for a PO. If the calculation
is zero, PLD is set to one. When the item is first entered in the
Item Catalog, Pipeline Days is also set to one.
The PLD value in the example is 1.
For each line containing the item in POs that were received in the last 90 days,
Create Date - Initial Receipt Date = Days
For all POs,
Sum: Days = Total Days
Sum: The number of lines containing the item = Num of Lines
If: Num of Lines > 0
Then: Average Pipeline Days = Total Days / Num of Lines
If Average Pipeline Days = 0
Then: Average Pipeline Days = 1Otherwise: Average Pipeline Days = 1
If: Average Usage per Day > 0
Then: Days of Stock = (On Hand Quantity
- Allocated Quantity) \ Average Usage per Day
Otherwise: Days of Stock = On Hand Quantity - Allocated Quantity
(Not on the report)
The response formula calculates the Order Quantity. The calculation is:
Order Quantity =
(Reorder Point * Optimum Quantity Factor)
+ (Pipeline Time * Avg Usage per Day)
Maximum Order Quantity
=
Maximum
Quantity
-(On
Hand Quantity - Allocated
Quantity)
-(On
Order Authorized - On
Order Not Authorized)
- In
Transit Quantity
+
Backorder Quantity
+(Pipeline
Time * Avg Usage per Day)
If:
Maximum Quantity > 0
If:
Maximum
Order Quantity > 0
If:
Order
Quantity > Maximum Order Quantity
Then:
Order
Quantity = Maximum Order Quantity
Otherwise,
if
Maximum
Order Quantity not 0,
Then:
Order Quantity = 0.
Otherwise, if
Maximum Quantity <= 0,
Then:
Use calculated Order Quantity.
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