Using the Suggested Order List - Response Formula Description

Using the Suggested Order List - Response Formula Description Version

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Overview View and Print the Suggested Order List Interpret the Suggested Order List. Response Formula	Working with purchase orders Searching for a PO Viewing PO details Copying a PO Creating a PO Creating and viewing PO notes Faxing a PO Working with standing POs Using blanket POs Separating POs by department, vendor, item, etc. Using direct delivery POs Creating and sending EDI POs Confirming prices Authorizing POs Running PO reports Matching an invoice to PO receipts Deleting a PO Line Manually completing a PO Deleting a PO
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Overview

The Suggested Order List is useful for sites that maintain an in-house inventory of items at one or more asset locations. The ERP response formula is used to determine if an item needs to be reordered and what the Order Quantity should be. The response formula calculates the suggested Order Quantity for each item based on the information maintained for that item in the inventory at a particular asset location.

When the response formula determines that an item's available-to-issue quantity has dropped too low (equal to or less than the order point), the system puts the item on a purchase order and on a report — the Suggested Order List (SOL). The Suggested Order List shows the quantity of items needed for purchase, along with other stock level statistics.

In balance, for system-generated POs, the system reduces the Order Quantity of a stock item when the item's available quantity increases as a result of several activities. The activities include:

Inventory adjustment
Department return to inventory
Physical inventory that adjusts the on-hand count upwards
Receipt-credit transfer
Quantity adjustment (e.g., during a pick)
Issue to a department that kills a backorder
An issue-transfer that kills a backorder
Backorder cancellation
Over receipt

Note: Available Quantity equals On Hand Quantity (which physically exists in inventory) minus Allocated Quantity (quantity that has already been promised to outstanding requisitions).

When available quantity increases as a result of any of these activities, the system subtracts the quantity increase from the Ordered Quantity for purchase order lines. (The decrease in ordered quantity affects purchase orders that are regular and unauthorized, have not been manually adjusted, and are not Direct Delivery.)

If a decrease reduces a PO line's Ordered Quantity to zero, the system deletes the PO line. A System Note is written to any changed PO line. A System Note is also written to any PO where a line is deleted.

Viewing / Printing the Suggested Order List

The general Suggested Order List (for all vendors) is available from the Supply Chain (Materials Management) Reports menu. The Suggested Order List for any vendor is available from the menu next to the vendor on the Vendors list.

To view the general Suggested Order List for all vendors:
- From the Materials Management main Contents, select Reports > Today's Suggested Order List.
  The Suggested Order List runs and is available from Reports > My Archived Reports.

To view the Suggested Order List for a single vendor:
1. From the Materials Management main Contents, select Vendors > Vendors.
  The Quick Click menu appears.
2. Use the Quick Click menu to locate the vendor of interest, or click Show All to view the Vendors list and locate the vendor.
3. Click Print Suggested Order List next to the vendor.
  The Suggested Order List runs and is available from Reports > My Archived Reports.

The Excel worksheet linked here shows you how to calculate the response formula described in the following section, if you want to try some sample calculations yourself.

Flowchart of Calculations

A flowchart is available that depicts how the system calculates various statistics (minimum stock quantity, reorder points, optimum order quantity, etc.). These calculations are used to generate the Suggested Order List. Click here to view the flowchart.

Interpreting the Suggested Order List

The sample Suggested Order List, run for a single vendor, shows rows of data for a purchase order (PO 4850) containing the item 0204061T. The Suggested Order List for a vendor may contain multiple purchase orders. The number of purchase orders depends on the items ordered and on the requirements of the ordering department or vendor if, for example, separate purchase orders by department are used. A detailed discussion of the report is contained in the following sections.

Header

For each purchase order, the report shows the PO Number and PO Type, Asset Loc for the items, Vendor Name and Buy-From Location Name, Buyer, and a minimum order dollar amount. If the vendor has no minimum, the Minimum Order field is $0.00.

Rows 1, 2, and 3 of the Item Information

The first two rows for each item listed on the SOL contain item record information. In the example, look at the blue shaded area which displays the item 0204061T on the SOL.

Beginning at the left, the first row contains:

Item Number: 0204061T
Item Type: Stock
Item Description: Floor pad covers - small
Maximum Quantity: 0
Requested Order: 100 EA
Purchase Conv: EA PK/10. The conversion factor of the UOM used for purchasing.
Suggested Order: 10 PK . The Suggested Order is the total amount of the item to be placed on a purchase order to a vendor or on a transfer requisition to an Asset Location. This value is calculated by the Response Formula based on the information maintained for the item in the inventory at a particular Asset Location.
Unit Cost: 20.00
Extended Cost: 200.00

Returning to the left with the next row, fields show:

Primary Aisle/Bin: P/19
Alternate Aisle/Bin: none shown.
Mfg Item No: 0204061STT
Vendor Item No: 0204061STT

Row 3 of the Item Information

The third row (beginning on the left) contains order quantities and stock statistics (described next) from the response formula.

Reorder Point - MSQ or SSQ

Reorder Point Calculation

The system calculates the order point as follows:
If: Minimum Stock Quantity > Safety Stock Quantity
Then: Reorder Point = Minimum Stock Quantity

Otherwise: Reorder Point = Safety Stock Quantity
If: Both the Safety Stock Quantity and the Minimum Stock Quantity are zero
Then: The Reorder Point is 1.

MSQ calculation

The first field on the left of the report identifies the MSQ (Minimum Stock Quantity) or the SSQ (Safety Stock Quantity). For the item 0204061STT, the system shows the SSQ equaling 2.
The system only calculates MSQ for an item when the item has been in the system for 45 days.
The system calculates the Minimum Stock Quantity for an item if the Auto Adjust Minimum Stock Quantity indicator is set for the item.
The calculation of MSQ is:

If: Days Between Delivery > 0
Then: Minimum Stock Quantity = Days Between Delivery * Average Daily Usage

Otherwise: Minimum Stock Quantity = PipeLine Days * Average Daily Usage

SSQ definition

Safety Stock Quantity - The minimum acceptable stock quantity for an item. The Safety Stock Quantity
is a value that your Materials Manager or system administrator sets on the item record.

When the Reorder Point is equal to the Safety Stock Quantity, the system prints "SSQ" in bold type.

OF

OF: Optimum Quantity Factor - The OF for item 0204061STT is 2.
The Optimum Quantity Percent is used to calculate the Optimum Quantity Factor.

The Optimum Quantity Percent is a value that your materials management group must enter manually. This value defines an optimum stock level percentage that modifies the reorder point as additional safety stock. It is an added "safety margin" that your site may wish to specify. The Optimum Quantity Percent is entered for both the asset location and the item itself. The entry for the item takes precedence.
OF calculation

If: Item Optimum Quantity Percent = 0
Then: Optimum Quantity Factor = (Asset Location Optimum Percent / 100) + 1

Else: Optimum Quantity Factor = ( Item Optimum Quantity Factor / 100) + 1

OPTQ

OPTQ: Optimum Order Quantity - In the example for item 0204061STT, this value is 2.
The OPTQ is calculated as follows:
Optimum Quantity = Reorder Point * Optimum Quantity Factor

OHQ

OHQ: On Hand Quantity - The quantity of an item in stock, including the Allocated Quantity.
In the example for item 0204061STT, the OHQ is 96.

ALO

ALO: Allocated Quantity - The total quantity of the item that has either been released for picking, or has been put on a pick list, but not confirmed.
In the example for item 0204061STT, this value is 20.

TIQ

TIQ: In Transit Quantity - The total quantity of the item on transfer requisitions, but not yet received.
In the example, TIQ is 0.

BO

BO: Backordered Quantity - The total quantity of the item on backorder to all departments, within the current Asset Location. In the example for item 0204061STT, BO is 0.

OOA

OOA: On Order Authorized quantity - The total quantity of the item on purchase orders that are authorized, but not yet received.
The OOA value in the example for item 0204061STT is 20 .

OON

OON: On Order Not Authorized quantity - The total quantity of the item on purchase orders that are not authorized.
The OON value for item 0204061STT in the example is 0.

PLD

PLD: Pipeline Days - The number of days between the created date on a PO for the item and the initial receipt date for a PO. If the calculation is zero, PLD is set to one. When the item is first entered in the Item Catalog, Pipeline Days is also set to one.
The PLD value in the example is 1.
PLD calculation

For each line containing the item in POs that were received in the last 90 days,

Create Date - Initial Receipt Date = Days

For all POs,

Sum: Days = Total Days

Sum: The number of lines containing the item = Num of Lines

If: Num of Lines > 0

Then: Average Pipeline Days = Total Days / Num of Lines

If Average Pipeline Days = 0
Then: Average Pipeline Days = 1

Otherwise: Average Pipeline Days = 1

AUD

AUD: Average Usage per Day - The average quantity of the item used per day. In the example, its value for item 0204061STT is 1.26. The AUD is calculated for both stock and non-stock items.

To calculate the average daily usage, the system does the following:
- Sums the daily usage for the organization, asset location, and item number for the previous 30 days.
- Divides the sum by 30 and rounds it to four decimal places.

DOS

DOS: Days of Stock - The number of days of stock remaining for the item, calculated for stock items. The DOS value in the example for item 0204061STT is 76 .

DOS calculation

If: Average Usage per Day > 0
Then: Days of Stock = (On Hand Quantity - Allocated Quantity) \ Average Usage per Day

Otherwise: Days of Stock = On Hand Quantity - Allocated Quantity

Maximum Stock Quantity

(Not on the report)

The Maximum Stock Quantity (MSQ) is the maximum quantity of an item that can be ordered at any one time. This value is tracked when a site has limited storage space. Backorders are not included in the MSQ.
If the Maximum Stock Qty is zero, the Order Quantity is used as calculated.
Consignments don’t use Optimum Quantity Factor, Pipeline Days, and Avg Usage Per Day.