Product Inquiry - Replenishment overview

Product > Inquiry > Product

Use this page to view the replenishment information for this product and warehouse.

Usage

Click Usage to view detailed usage information for the product and warehouse. This includes the total number of line hits experienced with the selected product.

To view usage detail for a specific month, click the arrow to the left of the appropriate line.

Alternate Vendors

Click Alternate Vendors to view the alternate vendors that were set up for the product in Product Warehouse Product Setup. One or more alternate vendor can be assigned in addition to the Authorized Replenishment Path vendor.

ROAI

If your vendor announces a special sale or a price increase, you have an opportunity to purchase popular items when the price is low. You must evaluate several factors before you risk the investment in additional stock.

The Return On Investment Calculator is designed to calculate the net bottom line return achieved by purchasing extra inventory. There are two important facts you must provide:

The desired return on additional investment
The discount you are trying to attain

There are three basic conditions to use the Return On Investment Calculator:

The vendor offers you several order discount levels.
The vendor notifies you of a future price increase.
The vendor offers a temporary promotional price.

For each of these three conditions, your objective is to buy low and sell high. Any time you speculate, there is always the risk that you may end up buying low and selling lower or not selling at all.

The main point to remember is that your overall savings from the extra purchase must outweigh the outgoing cost of the product once it sells. The outgoing cost includes the cost of the product and the carrying cost for the length of time it is stored in inventory. The carrying cost is the hidden cost incurred when inventory is carried for any length of time. It is determined on a per warehouse basis.

Items to include in the carrying cost are:

Cost of storage space
Taxes
Obsolescence and loss
Inventory handling
Cost of money

The carrying cost is always expressed as a percentage. The quickest and easiest way to determine your current carrying costs is to use the current prime rate plus 20 percent. The carrying cost percentage equals the cost of carrying inventory for a full year. To determine the carrying cost for one month, divide the total carrying cost by 12.

The Return On Investment Calculator works with stocking units and amounts. If the vendor expresses the three options in weight or cubes, you must convert it to an amount before using the Return On Investment Calculator. The critical questions to answer are:

Should we make a purchase?
How much should the purchase total?

This formula is used to determine the extra stock to purchase.

Extra Stock to Purchase = (24 * Discount Percentage) / (ROAI + Carrying Cost%)

The return on investment should be substantial, because you are investing additional funds in additional inventory. The return on investment is generally estimated at 40%, which automatically defaults into the Return on Additional Investment field. This is an estimate that you can override. The carrying cost is specified on the Product Warehouse Description Setup record.

For example, your supplier lets you know a price increase of 10% is occurring in the near future. Use this table to determine the amount of extra stock to purchase:


Product:	EM-100 Bulk Cable
Whse:	Main
Usage:	10/month
Line Point:	55
Order Point:	45
Currently Available for Sale:	61
On Order:	1
ROAI:	40%
Additional Discount:	10%
Extra Stock to Purchase:	34.28

(24 x .10) / (.40 + .30) = 2.4 / .7 = 3.428 x 10 = 34.28

This is a preliminary estimate. The result from this example indicates you can purchase 3.4 months of extra inventory where the price is about to go up by 10 percent. Note that emphasis is placed on extra inventory. But, extra inventory above what amount? These rules are applied to the initial answer calculated (3.4 months).

If the Net Available + On Order is below the line point, you should purchase all of the extra stock recommended. This message is displayed:

Product Available + On Order is < than Line Point; a full buy is Recommended.

If the Net Available + On Order is above line point, the usage rate is used to determine the length of time until the line point is reached. The time calculated is subtracted from the initial answer.

# of Months = (Net Available + On Order) – Line Point / Usage Rate

If the # of Months is less than the Extra Stock Months then:

(Extra Stock Months - # of Months) * Usage

This message may display:

No Usage for this Product (if no Usage Rate exists).

The recommended purchase has been adjusted because stock level is above line point.

If the Net Available + On Order is not at the line point within the months specified, nothing is recommended for purchase. This message is displayed:

Current Stock will not reach Line Point within the Recommended Time Frame.

In our example, the Net Available + On Order is above the line point. This example demonstrates how the initial answer is adjusted.


Product:	EM-100 Bulk Cable
Whse:	Main
Usage:	10/month
Line Point:	55
Currently Available for Sale:	61
On Order:	1
ROAI:	40%
Additional Discount:	10%
Extra Stock to Purchase:34.28	Months: 3.428

(24 x .10) / (.40 + .30) = 2.4 / .70 = 3.428 x 10 = 34.28

61 + 1 – 55 / 10 = .70

3.428 - .70 = 2.728 x 10 = 27.28

New Extra Stock to Purchase: 27.28 Months: 2.729

Additional limitations to consider that are not calculated into the Return On Investment Calculator are:

If you cannot raise the selling price of the product within a 2 month period, the economic purchase is generally not worth making.
Promotional buying situations have the same purchasing problems as those with price increases. During the promotion the price goes down, but when the promotion is over, you must determine the extra stock to purchase all over again.

Adjusters

The Adjusters information is accessed from Product Replenishment Setup, Product Warehouse Products Setup, and Product Administration Exception Processing Center for products for which an Inventory Value Change exception was created.

Inventory value changes occur when one of three order point adjusters is applied: Average Sales Quantity (ASQ), Five-high, or Threshold Minimum. The information displayed is the data stored in the exception record created during Product Administration Month End Processing Report.

When ordering controls are recalculated in any of these functions, Product Inquiry - Replenishment is updated:

Product Administration Month End Processing Report
Product Administration Exception Processing Center - Usage Analysis
Product Administration Usage Rate Analysis
Product Administration Usage Rate Update
Purchase Demand Center Entry

Message

Any messages related to adjustments made to this product as a result of the ASQ, Five-high, or threshold minimum settings are displayed in this section. These messages describe the specific value changes experienced by the product when an adjuster was applied during Product Administration Month End Processing Report. The value changes to inventory and order point are supported by the data in the other sections of this inquiry.

Threshold

The Threshold section displays the adjusted order point, line point, and any inventory value difference due to the application of the threshold minimum order point. The parameter settings from Product Replenishment Setup - Adjusters are also displayed. If the threshold minimum adjuster was applied to this product, it is highlighted and noted in the message section.

Five-High

The Five-High section displays the adjusted order point, line point and any inventory value difference due to the application of the Five-High adjuster. The Five-High adjustment can be set to only occur when the product has had a minimum number of hits by entering a value from 2-9999. The five highest sales during the standard usage months are displayed. The highest sale, marked with an asterisk, is removed from the calculation before an average sales value is determined. Parameter settings for Five-High are noted with the Company designation if they are derived from the Product Replenishment Setup - Adjusters company level record. The Product/Whse designation is displayed next to Five-High parameters that are derived from Product Warehouse Products Setup - Ordering. Warehouse, Vendor, or Product Line is displayed next to parameters from Product Replenishment Setup - Adjusters for that level.

If the Five-High adjuster was applied to this product, it is highlighted and noted in the message section.

ASQ

This section displays the adjusted order point, line point, and any inventory value difference due to the application of the Average Sales Quantity (ASQ) adjuster. The number of line hits experienced during the standard usage months and the accumulated usage for the same period are displayed.

Note: If the Should the Transfers be included in the ASQ Calculation option in Product Replenishment Setup - Adjusters is No, transfers are deducted from this value.

Parameter settings for ASQ are noted with the Company designation if they are derived from the Product Replenishment Setup - Adjusters company level record. The Product/Whse designation is displayed next to ASQ parameters that are derived from the Warehouse Products Setup - Ordering record. Warehouse, Vendor, or Product Line is displayed next to parameters from Product Replenishment Setup - Adjusters for that level.

If the ASQ adjuster was applied to this product, it is highlighted and noted in the message section.

Month End Merge Values

This section shows the values calculated during Product Administration Month End Processing Report before the adjusters are applied. This includes:


raw, unadjusted order point	raw line point
number of month’s usage	usage method
usage rate	safety allowance quantity from Product Warehouse Products Setup - Ordering

If ranking by warehouse, the warehouse rank is displayed.

Rollup

Click the Rollup to see a listing all warehouses in which the selected product exists. The Rollup section is available for inquiry on products in the main, or parent warehouse only, and when the option, Rolled Up Usage, is selected in Product Replenishment Setup. The amount shown in the Quantity column reflects the demand, or usage, for the product in each warehouse. The warehouses listed include the main, or parent warehouse, and all branch warehouses.

These usage amounts are rolled up into the usage for the main warehouse if you selected the Rolled Up Usage option in Product Replenishment Setup - Usage. The usage amount shown for the parent warehouse does not include the rolled up values of all the branch warehouses. You can view the rolled up usage amount in Product Warehouse Products Setup - Ordering.

Trend

Click Trend to access a trending inquiry to validate the trending percentage of a seasonal product. This section is displayed when:

the Usage Method field in Warehouse Product Setup - Ordering is Trend %
the Use Seasonal Trending field in Product Replenishment Setup - Usage is Yes
the Set the limits of the Trend Percentage to a Maximum of field is greater than 100 (or the corresponding field in Product Warehouse Product Setup Seasonality is greater than 100), and the Frozen field is selected