Using the Suggested Order List - Response Formula Description Version

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Overview

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.

Viewing / Printing the Suggested Order List

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.

Flowchart of Calculations

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.

Interpreting the Suggested Order List

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.

Header

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.

Rows 1, 2, and 3 of the Item Information

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:

Row 3 of the Item Information

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

MSQ calculation

SSQ definition

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.

OF
OPTQ
OHQ
ALO
TIQ
BO
OOA
OON
PLD

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 = 1

Otherwise: Average Pipeline Days = 1

AUD
DOS
Maximum Stock Quantity

(Not on the report)

Response Formula

          Otherwise, if
          Maximum Quantity <= 0,

     Then:
     Use calculated Order Quantity.