Tuesday 15 March 2016

Lead Time Usage in Reorder Calculation

When an Item is requested on a storeroom a storeroom reservation (SR) is done. All the reservations are aggregated and checked against the current stock before reordering. The Direct Issue request (VR) are directly requested to the Vendor without any aggregation.  During Reorder Process Lead time is used in calculation.

Important Parameters Used:
Lead Time (Inventory application)
Promised Lead Time (Item Vendor Tab in Item Master or in Inventory application)
Additional Lead Time (Re-Order Processes: Both the Action Items in Inventory application)

            The following is a diagrammatic representation of how the Lead Times are used:

During the reorder action (in both stock replenishment and Direct Issue) one can give the additional Lead Time which is added to the Lead time (inventory) or Promised Lead Time (Vendor Item) to calculate the time fence (or the time in the distant future to look ahead for any demand).

As shown in the diagram, the reservations on store (SR1 and SR2) will be used in the reorder calculation as they are within the time region determined by the Lead Time and the Additional Lead Time. Reservation(s) falling beyond this time region are not considered.

Similarly Direct Issue requests VR1, VR2 and VR3 are re-ordered and VR4 is not.

Important Notes for Stock Reorder:
When Items are reordered the ‘Required Date’ is the earliest date of all the required dates. In the example above for storeroom if:
Current Balance = 10
SR1: Qty = 5 and Date = +5
SR2: Qty = 8 and Date = +10
The Purchase Request (for stock) will be created based on the required date of SR1 alone (+5) even if SR1 can be satisfied from current stock.



Courtesy: An old compilation from Infy Team

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