Time-phased order point

The process of calculating the reorder point based on supply and demand is called time-phased ordering (TPO).

TPO can be used to analyze fluctuations in demand and then plan future orders based on past ordering trends. During the flu season, for example you can order more boxes of tissues than you do in non-flu seasons.

Use TPO to replenish inventory based on projected item availability by periods. TPO normally applies to items with long lead times. You can plan orders for up to 52 periods. The projected availability of items are calculated as follows:

Projected Item Availability = Stock-on-hand Quantity - (Firm Demand + Remaining Forecasts) + Scheduled Receipts

Replenishment orders are calculated when the projected available quantity falls below the safety stock quantity. This example shows how item availability is calculated: For the first period, the projected availability is 61 = (94 - 23 - 60 + 50). Because the safety stock is 40, an order quantity of 100 is created.