To work with minimum and maximum inventory

This topic describes how a supplier in a vendor managed inventory (VMI) setup can perform supply planning and replenishment based on the minimum and maximum inventory level that the customer should have in inventory.

Relevant parameters

The following fields on the Terms and Conditions Line (tctrm1620m000) session's Planning tab, determine how this method is applied.

Minimum levels, maximum levels, or both

To use this method to plan the supply to the customer, set the Use Min-Max Inventory Levels field to Minimum Levels, Maximum Levels, or Minimum and Maximum Levels.

If you set the Use Min-Max Inventory Levels field to Maximum Levels, you must use another method to plan the supply.

If the terms and conditions agreement specify a maximum level, the customer limits the forecast for each forecast period to this maximum level. If the inventory at the customer exceeds the maximum inventory level, LN generates a signal for the customer and the VMI supplier.

Methods to specify inventory levels

You can define the required inventory levels in the following ways:

  • Fixed inventory levels
  • Time-phased inventory levels
  • Inventory levels based on the number of days of supply

For more information, refer to To specify the minimum and maximum inventory.

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