FAQ: How is the Reorder Point calculated? |
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The Reorder Point is based on your Safety Stock % and the average weekly Demand for the last 12 months. Please note that if this calculated Reorder Point is greater then Min Stock Quantity entered for the item in the Product Master, the Min Stock Quantity will override the system calculations and use the Min Stock Quantity as the Reorder Point. Min Stock Quantity can be entered for items with volatile demand, or for new items that do not have enough demand history for an accurate calculation.
Example:
Weekly Demand x Lead time in Weeks + Safety Stock
10 per week x 2 weeks to get here + 20% safety stock = 24 for a Reorder Point
You can view the Reorder Point for any item in the Product Analysis screen.
Adjusting the Reorder Point The Reorder Point can be adjusted by altering any of the factors that are part of the calculation. •Demand - Adjust the demand in the Product Analysis screen, under the Demand tab. Click on the Update Demand button to open the Product Demand Update window. Any months that have extremely high or low demand amounts can be changed to reflect a more average number. Changing the demand will only affect your purchasing; it will not alter your sales. •Lead Time - Adjust the lead time in the Product Master, under the Information tab. Under the Unit of Measure section there is a Lead Time Days field that reflects the number of days between the ordering of the item and the receiving of the item. •Safety Stock - Adjust this percentage in the Product Master, under the General tab. If the Safety Stock % field is blank, the system assumes 20% as the value. This field can also be adjusted for groups of products through Product Mass Change. |