Thursday, September 27, 2018

Reorder point is showing as zero/null even if there is sufficient data and Auto-Calculate = T

Question:
 
Why is the reorder point showing as zero/null even if there is sufficient data and Auto-Calculate = T
 
Answer:
 
Items will have zero/null reorder point if the system will compute the reorder point based on the quantity sold in transactions the result is less than 1.
 

Example:

Order Analysis Interval = 6 months
Quantity sold in last 6 months = 10 (regardless of how the quantity is divided in the transactions)
Lead Time = 14
Reorder point formula: Daily demand ( x/180) x Lead Time
Computation of Reorder Point: (10/180) x 14 = .777 or zero


Note: The lowest quantity sold that will have a 1 reorder point in this example is 11 holding all the variables constant.


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