Product line qualifications

Setting up your product lines correctly is vital to the outcome of the Purchase Entry Recommended Replenishment Action Report (PO RRAR) results. Use Product Line Setup to define the line buying parameters for the products that are tied to the product line. The information contained on the Product Line Setup record should clearly represent a vendor's product line buying criteria.

The PO RRAR looks for products with a buyer-vendor combination that matches the parameters you have specified for the report. Any of the qualifying products, whether frozen or not, are placed on the PO RRAR if these conditions are met:

The review cycle is due.
A product drops below order point.
Nonstocks and specials consist of one-half of your vendor's target buy.

Products that can initiate a line review must meet these conditions:

Active
Regularly stocked
Not a kit

When you must place an order anyway, it is best to review the entire product line to determine if more products can be placed on the order to potentially achieve a larger discount. The line point is an upper limit that helps you select the appropriate variety of products for the purchase order. The objective is to include only those products that are below line point. Including products above line point may distort future replenishment cycles.

Note: If the products qualifying to be included on the order do not reach at least half of the target buy requirement, then do not place the order for the entire product line. Order the product(s) that require attention from a different source, or order the product from your vendor. This may seem to cost more, but when weighed against the cost of carrying the additional stock in inventory and potentially throwing off the product's review cycle, this is likely less expensive. The order points and line points establish controls that help you determine what products should be reordered.

After the line is qualified, the products in that line are reviewed to verify whether they should be included on the PO RRAR. Only the products that meet the product qualifications for the matching buyer and vendor print on the report. These qualification include:

Review Cycle: Product is included if the Last Review date in Product Lines Setup plus Review Cycle days is less than, or equal to, the current date.
Order Point: If at least one product drops below order point, the entire line must be reviewed.
Nonstock, Specials: These are exceptions to the PO RRAR. They are included for each vendor match.

The order method and order quantity determines the quantity the PO RRAR suggests. For example:

The order method stored on Product Warehouse Product Setup-Ordering is used to determine the correct order quantity for the product. Order methods include economic order quantity (EOQ), class, min/max, quantity break, blanket order, and human. If a product's ordering method is min/max, and is equal to or below order point (min), the product is included.
If the order method is min/max, the product is displayed on the report when the product is below or equal to the minimum. The quantity is then rounded. Any other order method uses the order quantity on the warehouse product record, unless purchasing parameters are available.
The Product Line Setup-General-Purchase Levels and Product Warehouse Description Setup records contain purchasing parameters. These records are used by Product Administration Month End Processing Report if they contain values other than zero. When the order method is EOQ, the carrying cost and replenishment cost for a purchase order can be defined on these records. The Product Line Setup-General-Purchase Levels-Purchasing Parameters, Min Weeks Supply and Max Weeks Supply values put a limit on the lowest and highest values of the calculated order quantity. The calculated order quantity will not drop below the Min Weeks Supply and will not exceed above the Max Weeks Supply.

For any product, except those with a Min/Max order method or nonstocks, this formula is applied:

Line Point – Purchasing Net Available (PNA)
where PNA is the sum of the product’s available stock level, calculated with this formula:
On hand – Reserved – Committed - Backordered + On order + Received

In Product Line Setup-General-Purchase Levels-Purchasing Parameters, these actions occur based on your settings:

If you select Use ROQ?, the PO RRAR replenishment process uses the vendor’s recommended order quantity or out-of-season order quantity from Product Warehouse Product Setup as the quantity recommended to purchase. The setting for the PO RRAR report option, Apply Halfway Rounding Rules?, then applies to this order quantity.
If you clear Use ROQ, the RRAR always uses the standard line point minus purchasing net available formula to calculate the quantity recommended to purchase.
When the order quantity is less than 1/2 of a standard pack or buying unit, the order quantity is rounded up, down, nearest, or to a multiple, based on whether the option, RRAR < ½ Unit Rounding is select in the General section. When a buying unit is specified, but the standard pack is not, the order quantity is rounded to the nearest buying unit, which will be equal to or greater than 1 buying unit.