Transfer Entry Recommended Replenishment Action Report overview

Order Method

Expressed in the simplest form, the Min/Max order method is a control system where two points of management are assigned to an inventory product. The lower of these two, the Minimum, is the point at which you should initiate a transfer of the product. This calculation is intended to set a mark or level at which stock must be replenished in order to receive the shipment before a stockout occurs. This is the recommended order method when branches are in close proximity to the supplying warehouse. Min/Max controls are used in place of Order Point/EOQ since the branch may transfer one item at a time (no target or line buy incentives exist) and may have a very short lead time.

The formula to calculate Min is identical to the order point calculation:

[(Average Monthly Usage/ 28 days) x (Lead Time Days)] + Safety Allowance

On the other end of the spectrum is the Maximum point. This represents the upper limit you want to replenish up to. The system optionally calculates Maximum during Product Administration Month End Processing Report when the Calculate Maximums Based on 12 Turns option is set to Yes. If a warehouse's inventory investment should turn 12 times a year, the individual classes must turn in this order:

• Class 1 - 20 turns per year
• Class 2 - 18 turns per year
• Class 3 - 16 turns per year
• Class 4 - 12 turns per year
• Class 5 - 10 turns per year
• Class 6 - 8 turns per year
• Class 7 - 6 turns per year
• Class 8 - 5 turns per year
• Class 9 - 4 turns per year
• Class 10 - 3 turns per year
• Class 11 - 2 turns per year
• Class 12 - 1 turn per year
• Class 13 - 0 turns per year

If an item is a class 1 product, its replenishment quantity is 1/20th of a year's supply. The difference between Min and Max is 1/20th of a year's supply:

When the Product Administration Month End Processing Report option, Calculate Maximums Based on 12 Turns?, is set to No, the gap between the minimum and maximum is set manually by the user, and Product Administration Month End Processing Report always maintains the same gap by adjusting Min based on the standard minimum, and order point calculation, and then repositions max.

For example, min is 5; max is 10. The gap between min and max is 5. When Product Administration Month End Processing Report is generated, min is recalculated to be 8; max is set to 13; and the gap is still 5.

In a situation that involves a central warehouse pushing inventory to other warehouses, the central warehouse controls the inventory flow by monitoring the inventory quantities at the branch. A central warehouse can supply all warehouses within its jurisdiction at one time. In SA Administration-Administrator Options-Documents-Transfer Orders-Replenishment, the option, Push Stock On Hand, setting determines which level your stock should go to as the system is pushing stock to branches: Push Stock On Hand to Zero, Push Stock On Hand to Safety Level, or Push Stock On Hand to Order Point. If you select Zero, the Net Available on the Product Warehouse Product Setup record could potentially go to zero. If you select Safety, quantities could be pushed to branches until the safety allowance is reached. If you select Order Point, quantities could be pushed to branches until the product's level is at its order point.

A warehouse may pull stock from another warehouse. This transaction is similar to a PO RRAR, except the warehouse is supplied from another warehouse rather than a vendor. The stock levels in the requesting ShipTo warehouse dictate the quantities that are pulled from other warehouses.

Alternative to Min/Max

The Product Line Setup and Product Warehouse Description Setup records contain purchasing parameters for warehouse transfers. When the order method is economic order quantity (EOQ), the carrying cost and replenishment cost for a warehouse transfer can be defined on these records. The Minimum Weeks Supply and Maximum Weeks Supply fields put a limit on the lowest and highest values the calculated EOQ order quantity. The calculated EOQ order quantity will not go below the Minimum Weeks Supply and will not go above the Maximum Weeks Supply.

When the Product Line Setup-General-Purchasing Parametersoption, Use ROQ?, is selected (Yes) and the ARP is followed, the order quantity is calculated as follows: Order Quantity + (Line Point – Net Purchasing Available)

Qualifying criteria

In reviewing products that qualify for the WT RRAR, the ship to warehouse is scanned. These guidelines are used to determine if a product qualifies for the WT RRAR:

• Stocked products

  In Product Warehouse Product Setup-General, set the Status field to Stock or Do Not Reorder. To include do not reorder products on the report, select Yes for the Print Do Not Re-order Products? option.

  In the Product Warehouse Product Setup-General, set the Type field to Warehouse or Central Whse.

  The Product Setup record cannot indicate an inactive, labor, or build-on-demand kit product.

  The WT Available is calculated and is used to determine if the product is included on the report. All quantities in the calculation are from the Product Warehouse Product Setup record. Qualifying products with an order method of Min/Max are included if the WT Available is less than or equal to order point. The WT Available is calculated with this formula: WT Available is equal to On Hand minus Reserved minus Committed minus Backorder minus WT Demand plus On order plus Received minus WT Ship Requests.

  An exception error message is displayed on the report to indicate the WT Available quantity was pulled below line point by ship requests.

  Note: Qualifying products with an order method other than Min/Max is included on the WT RRAR if the WT Available is less than or equal to line point on the Product Warehouse Product Setup record in the ship to warehouse.
  The order method, specified on the Product Warehouse Product Setup-Ordering record, helps to determine your order quantity. In addition, the Product Line Setup and Product Warehouse Description Setup records contain purchasing parameters for warehouse transfers. When the order method is EOQ [economic order quantity], the carrying cost and replenishment cost for a warehouse transfer can be defined on these records. The Minimum Weeks Supply and Maximum Weeks Supply fields put a limit on the lowest and highest values the calculated EOQ order quantity. The calculated EOQ order quantity will not go below the Minimum Weeks Supply and will not go above the Maximum Weeks Supply. If the recommended order quantity is less than line point, after calculations, the order quantity will be raised to line point less WT Available for products using EOQ, Class, and Qty Break order methods.

  Note: The PO Available is also called the purchasing net available and is calculated with this formula: PO Available is equal to On Hand minus Reserved minus Committed minus Backorder minus WT Demand plus On Order plus Received.

  This calculation determines what the qualifying product's order quantity will be, if the product's order method is not designated Min/Max. The difference between the WT Available and PO Available formulas is the Warehouse Transfer Ship Requests on the Product Warehouse Product Setup-Costs record.

• Nonstock/Special products

  • Company number and warehouse must match the parameters selected for the WT RRAR for the ship from warehouse.
  • The Special/Non-Stock field in warehouse Transfer or Sales Order Entry is set to Nonstock or Special. This includes special and nonstock build-on-demand kit components.
  • The transfer is in Stage 1 (Ordered) or Stage 2 (Picked). The Sales Order Entry order is in Stage 1 (Ordered) or Stage 2 (Picked).
  • The transfer is the most recent, that is, the suffix is the highest number available.
  • The quantity shipped is less than the quantity ordered.
  • The Return option is set to No, indicating the line item is not being returned in Sales Order Entry.
  • The Approval option is set to Yes.

  If a nonstock is entered in Sales Order Entry and both the Vendor and Warehouse fields are blank, the product will not be displayed on the WT RRAR until the warehouse has been entered. The cost will come from the Sales Order Entry or warehouse Transfer line item.

  When you generate a WT RRAR for special products, and the product is stocked in another warehouse, the product is included on your report. You can accept and merge the item the same way stock products are accepted and merged. If the surplus is displayed after the special line, the surplus is tied to the special line if the surplus is accepted. If both the special line and the surplus are accepted, the surplus is ignored because the warehouse transfer has already been tied. Surplus will not be displayed for the ship to warehouse that the special line is ordered in. The cost will be pulled from the ship to warehouse because it is a special order.

  If a warehouse transfer line item is tied to a purchase order line item that is cancelled or deleted, the tie will be broken to allow the WT RRAR or PO RRAR to pick up the item on a subsequent report. This tie, or lack of tie, can be seen on the Transfer Master List Report in the Other Line Item Information section for the Order Type and PO/WT/WO # fields.

• Order-as-needed products

  • An order-as-needed product is processed the same as a special product.
  • An order-as-needed product is priced based on the Product Setup record’s Selling Unit.
  • The cost comes from the ship to warehouse's Product Warehouse Product Setup record.
  • Products that have the Status field in Product Warehouse Product Setup set to Order as Needed that are components of kits and have demand balances in Product Warehouse Product Setup qualify for the WT RRAR when a review is performed. The quantity to order is determined by adding the Product Warehouse Product Setup Back Ordered and Demand quantities and subtracting the PO Available quantity and the special lines. If the result of this process of elimination is zero or less, the product will not be displayed on the report. If the result is greater than zero, the product will be displayed on the report because the quantity to order is a result of the product being a kit component with demand. Standard pack and buying unit rounding will not be performed, and the kit component demand will not be displayed on the report when the Process Only Special/Nonstk/Rush Lines? option is set to Yes. The Transfer Demand Center Entry acceptance or WT RRAR acceptance defaults to Yes for the product.

• Seasonal products

  If the product is a seasonal product, the in-season Order Quantity from the Product Warehouse Product Setup-Ordering record is used if the product is in season. Otherwise, the out-of-season Order Quantity from Product Warehouse Product Setup-Ordering is used.

• Surplus

  Utilizing surplus from other warehouses gives you the opportunity to reposition stock, take care of customers in other locations, and improve the overall use of inventory dollars. Surplus is calculated from quantities in the Product Warehouse Product Setup record with this formula:

  • Net Available is equal to On Hand minus Reserved minus Committed
  • Surplus is equal to Net Available minus Backorder minus Demand plus Received minus Line Point Order Quantity

  For example, using a Net Available of 25; Backorder quantity of 1; Demand of 2; Received quantity of 3; Line Point of 10; and an Order Quantity of 7, your surplus will be 8. Surplus = 25 – 1 – 2 +3 – (10 + 7) = 8

  If the product has a Min/Max order method, this formula is used:

  • Net Available is equal to On Hand minus Reserved minus Committed
  • Surplus for Min/Max is equal to Net Available minus Backorder minus Demand plus Received minus Line Point

  From that example, for products with a Min/Max order method, the quantities will result in a surplus of 15. The difference is the order quantity, which is not used in the Min/Max surplus calculation. A product is replenished up to the maximum quantity, rather than the maximum plus order quantity. For example, Surplus = 25 – 1 – 2 + 3 – 10 = 15

  • If a warehouse transfer is created on the WT RRAR due to surplus, the division number is included on the transfer.
  • In Product Warehouse Description Setup-General, if a Customer number is assigned and the field contains a value, the warehouse is consigned. In this case the surplus for that warehouse is not displayed on the WT RRAR.

• Customer forecasting

  If you have established customer forecasts in Product Customer Reservation/Forecast Setup, the calculations for selecting stock products requiring transfer replenishment include additional steps to account for expected forecast quantity. Active forecasts are selected by warehouse, product, and forecast start and end dates. If you select Include Lead Time and specify a Ramp Up Days in SA Administrator Options-Products-Replenishment, those days are added to the start and end dates when searching for active forecasts. The calculated quantity to purchase for all forecasts is added to the order point and line point values from the Product Administration Month End Processing Report, then these adjusted values are compared to the purchasing net available to determine which stock products to recommend for transfer.

  For stock products recommended for transfer, the transfer quantity is calculated for the stock item, then the calculated forecast quantity for all forecasts is added to that quantity. Finally, standard pack rounding is applied, and that value is assigned to the line item on the Transfer Entry Recommended Replenishment Action Report.

• Transfer markup of addons

  When the transfer markup addon functionality is activated, and Transfer Markup Addons Setup records exist, the Markup Addons field is displayed on the report. The field shows whether the transfer markup addons functionality is activated: yes or no. Addons are not stored or calculated on the report lines, however, when the transfer is created when the report is merged, the line addons are calculated and accumulated to the header of the transfer.

• Transfer unit of measure

  If a Product Warehouse Product Setup record contains a transfer unit of measure, the shipping warehouse’s transfer unit of measure is displayed on the WT RRAR instead of the buying unit of measure. If a transfer unit of measure does not exist on the shipping warehouse’s Product Warehouse Product Setup record, the stocking unit of measure is displayed. If surplus inventory exists, the surplus is displayed in the transfer unit of measure from the original shipping warehouse.

  If the buying unit is not specified, the system checks the standard pack setting. If the standard pack is also blank, the nearest transfer unit, which is on the shipping warehouse’s Product Warehouse Product Setup record, determines the order quantity. When a Product Replenishment Setup record exists but the shipping warehouse has a transfer unit, the system rounds by the transfer unit. If an Product Replenishment Setup record does not exist, the transfer unit is used for rounding. If smart unit is set, the system will round to the largest unit of measure it can. If the extra quantity needed to round up to the next larger unit times the cost of that unit exceeds the Product Replenishment Setup record, then the system will not use the next larger unit.

  For example, a standard pack is larger than a transfer unit is, but a buying unit is larger than a standard pack. A transfer unit contains 10 each in a box. A standard pack might be a case of 100 (or 10 boxes). The buying unit is a pallet of 50 cases (or 5000 each). The WT RRAR rounds to transfer units. The WT RRAR indicates to buy 3 each and the quantity would round to 1 box (transfer unit). If the WT RRAR indicates to buy 5101 each, it would round to 2 pallets (buying unit).

• Miscellaneous

  Comments from tied orders or transfers are passed to the WT RRAR. You can maintain the comments in WT RRAR Acceptance by choosing Notes from the Edit menu.

  If a customer does not accept back orders and the product they order is not in stock at the time the order is placed, the order goes to lost business. The WT RRAR will not pick up these transfers because there is no need to order the product to fill the order. This does not include special and non-stock products.

  Information from each product is from the ship-to warehouse Product Warehouse Description Setup records, with the exception of the cost, which is from the Product Warehouse Product Setup record for the ship-from warehouse. The option, Post to GL By, in SA Administration-Administrator Options-Products-Costs determines which cost on the Product Warehouse Product Setup record is used.

  In SA Operator Setup-Controls-Cost, you can set Allow User to View Costs to Yes. If this option is set to No, the cost is not displayed.

  • The maximum number of lines that can be supported on the WT RRAR is 9,999.
  • The maximum report number for the WT RRAR is 999,998. When the report number reaches 999,999, the number returns to 1, without actually assigning number 999,999.
  • You should approve or disapprove warehouse transfer requests before you run the WT RRAR because requests are not reflected in your Product Warehouse Product Setup-Costs balances: On Order or Reserved. Your order quantity is accurate and produces better results because all stocking and replenishment decisions are made so you can take appropriate action.