Netting inventory commitments

The following example describes demand netting of inventory commitments.

Example 3 : Inventory commitments netted against demand orders

Similar to Example 2, after you receive the second purchase order, but now with three pieces on hand available and a received quantity of nine pieces.

An inventory commitment can exist for one specifc demand. For example, an inventory commitment exists for sales order S3 of two pieces. The actual shortage for this sales order is not 10 in this case, but eight. The shortage for S3, however, still appears as 10.

The on-hand quantity is the quantity on hand that is available. This includes the inventory commitment for demand as displayed in the session. The inventory commitments for demand that does not appear in the session is not included in this on-hand quantity.

Note

You must respect the inventory commitment per demand line. As a result, the following applies:

The quantity assignments made for a demand line in the DMS session must at least meet the committed inventory for the demand line.
The sum of assigned received quantity and assigned on-hand quantity must at least be equal to the committed quantity.

The received quantity is within the force cross-docking range, therefore, first the received quantity is assigned, and then the on-hand quantity.

Item	X
Warehouse	WH1
Received Quantity	9 pcs.
Inventory on Hand	3 pcs.

Distribution in the DMS session is as follows:

Priority	Date	Demand	WH	Shortage	Assigned Received Quantity	Assigned Inventory	Cross-dock Orders
106	14-4-2005	Sales S4	2	2	2		CD4: 7 pcs. - Planned
203	11-4-2005	Sales S1	1	10	7	1
205	13-4-2005	Sales S3	2	5		2
212	15-4-2005	Transfer T2	1	5
500	20-4-2005	Forecast F1	2	20

Despite the fact that 12 pieces must be divided, you cannot fulfill demand S1 of 10 pieces, because of an inventory commitment for demand S3.

The available received quantity to be assigned per demand line is calculated as:

received qty - assigned received qty

The available on-hand quantity to be assigned per demand line is calculated as:

on hand - (committed to other demand + commitment to other demand covered by assignments) - on hand assigned to other demand

Calculation of the assigned quantities is as follows:

Total						9	3
Demand	Shortage	Available received calculation	Available received	Available on hand calculation	Available on hand	Assigned received	Assigned on hand
S4	2	9 - 0	9			2
S1	10	9 - 2	7	3 - (2 + 10) - 0	1	7	1
S3	5	9 - 9	0	3 - (0 + 0) - 1	2		2
T2	5
F1	20					__	__

The received quantity is outside the force cross-docking range, therefore, first the on-hand quantity is assigned, and then the received quantity.

Distribution in the DMS session is as follows:

Priority	Date	Demand	WH	Shortage	Assigned Received Quantity	Assigned Inventory	Cross-dock Orders
106	14-4-2005	Sales S4	2	2	1	1	CD4: 7 pcs. - Open
203	11-4-2005	Sales S1	1	10	8	0
205	13-4-2005	Sales S3	2	5		2
212	15-4-2005	Transfer T2	1	5
500	20-4-2005	Forecast F1	2	20

Calculation of the assigned quantities is as follows:

Total						9	3
Demand	Shortage	Available received calculation	Available received	Available on hand calculation	Available on hand	Assigned received	Assigned on hand
S4	2	9 - 0	9	3 - (2 + 0) - 0	1	1	1
S1	10	9 - 1	8	3 - (2 + 0) - 0	0	8	0
S3	5	9 - 1 - 8	0	3 - (0 + 0) - 1	2		2
T2	5			3 - (0 + 0) - 1 - 2	0
F1	20					__	__