Min / Max Replenishment Planning
A MIN, is the order trigger similar to the forecast + safety stock order point approach in DemandCaster. However, instead of being calculated as a forecasted/statistical value, it is an explicitly defined quantity. Min's are recommended when an item is difficult to forecast or is low volume.
A MAX is a hard order limit preventing an order quantity to not exceed the max amount. When applied, the suggested order quantity will be limited and may cause situations where demand will exceed supply.
Setting the Min Value
To set the MIN value for an item, either use the multi-edit function to change the item setting from any of the list views, or make the change in the options tab of the item. In this example, we are setting the value in the options tab of the item.
- Click Safety Stock Type hyperlink to open the Safety Stock options.
- Check the User Defined option and enter the Min value
Change the Consumption Type to Make/Purchase to Order
When using a Min value, you likely will not require a forecast to drive consumption. In most cases, we recommend a Min when the item is low volume or is difficult to forecast. The min replaces the forecast + safety stock basis of the order point when forecasting.
Click Save to apply the changes. Replenishment orders will now be generated only when the on hand plus on order during the lead time is below the Min level.
Entering the MAX Value
The MAX value may or may not be used with a Min. It is applicable when there is an ordering constraint such as capacity or limits in storage. In this case. To enter a Max value:
- Click "Item User Defined" to enable the Max logic and enter the value to be used.
- Click X to close the dialogue box
- Click Save to apply the new settings
Note: System calculated is the default value that does not apply any max value constraint against the item. With the default system calculated settings, the system will recommend the required replenishment quantity to meet the demand requirements.
Result of the Max Value in Requirement Planning
As can be seen below, the order quantity is constrained to the 25,000 units/week entered as the Max value. This in turn causes the Ending Planned on Hand to go negative due to demand exceeding supply.
Note: If the optional daily requirement planning logic is enabled, the max value would be a daily constrained value.
Add your comment