IN - Dynamic Replenish

Hi again!

In my last blog I've shown you how Static Replenishment process works.

Today, let's talk about calculating the Reorder Quantity in a dynamic way.

As I always do, let's see it with a quick example.

1) First of all we have to create a new Replenishment Class.

2) In order to set a dynamic Replenishment Calculation we must set the Item attributes.
For instance,  let's take the ST8000 item in the US008 business unit.

If we check the inventory status of this item, we'll see there are 1284 units available and 204 units reserved. So, we really have 1080 units available.

3) Let's go to Root > Inventory > Replenish Inventory > Setup Item Replenishment
It is in this step where the set-up information must be different from the Static Replenishment.

We should set some additional values:
Reorder Quantity Option: Min/Max
Replenish Class: DYNA (the one we had created)
Replenish Calc Period: 30 days. (meaning how often we will execute the replenishment process.)
Replenish Lead (Days): 5 days (it could be understood as a deadline)
Reorder Point: 4000.
Safety Stock: 50 (the minimum quantity we want to have in stock)

4) Having this configuration set up let's run the calculation process, chossing BU = US008 and replenish class = DYNA. The request option must be "Maximum Stock Qty" since that's the option we chose in the ST8000 item.

 Root > Inventory > Replenish Inventory > Calc Replenishment Parameters

In this case the "Calc Replenishment Parameters" will work by the following way:

a) Looks for the item Total Demand in the last "Replenish Calc Period" days

b) Calculates the Average Demand -> "Total Demand" / "Replenish Calc Period" days
In this case it will be 4020/30 = 134
c) Calculates the maximum quantity as "Average Daily Demand" *  ("Replenish Calc Period" + "Replenish Lead"  ) + Safety Stock.
So, in this case it will be : 134 * (30 + 5 ) + 50 = 4740.
Let's check it.

When we then run the "Create Replenishment Process" we will take this quantity into consideration.

5) Let's run de Create  Replenishment Process chossing BU = US008 and replenish class = DYNA.

 Root > Inventory > Replenish Inventory > Create Replenishment Request

6) We now go to the "Manage Replenishment Request" page and we could see recently created  Replenishment ID.
As we could see in the following screen the item is shown with 3907 units to be bought.

So, How is this number calculated? Here you have a basic explanation:

a) Searchs how many items were bought. ( 0 in this case)

b) Searchs how many  items were properly moved to inventory ( 0 in this case)

c) Searchs how many items were not  moved to inventory yet ( 0 in this case)

d) Searchs how many items were used to create new productions.
For instance, the ST8000 item is used when producing the PRD00126 item.

In this case we have 247 units that are used when producing

As a summary we early saw there were 1080 units available and we only have 247 in production process.
So, we actually have 833 units available for this item.
We need 4740 as a maximum quantity, so we need to buy 3907 units of this item, which matches the result of the Create Replenishment Process.

Once we have the Replenish ID, the PO process continues as explained in the Static Replenishment..

I hope this blog could be so useful to you as it is to me.

Regards.
Facundo Salerno.