Reorder Level

December 27, 2022 06:20

A reorder level refers to the inventory level at which a seller places an order with its suppliers to replenish the stock of a certain product.

In other words, the reorder level is the level of inventory at which a new purchase order should be placed.

The reorder level of stock is generally higher than the minimum level to cover any emergencies that may arise as a result of abnormal usage of materials or unexpected delays in obtaining fresh supplies.

Reorder Settings

Go to Settings--> General--> Reorder Level

The reorder level settings from the Settings tab, establish the levels for items to appear on the Reorder Level Report. These settings override the reorder levels set at the item level. Reorder levels can be calculated in one of three ways (fixed values, fixed period, or last x days). Pre-setting the reorder levels allows the user to quickly determine what items need reordering based on the criteria they have selected that best suit their business practice.

The date range must exceed the same-day range: The start and end day must not be the same date for Daily Sales Average.

Add Reorder Level

Click on the Add Reorder Level button to create a new reorder setting.

There are three types of Reorder Level Settings:

Fixed Values
- Fixed Quantity
Based on Sales
- Last x Days
- Fixed Period

Fixed Values

Fixed Values allow to user to set specific items and quantities for reordering. Minimum and maximum levels are only used for determining to reorder levels.

When a fixed value mode is selected for the Domain(ALL)/Venue/Store, the Master Item should have the minimum, maximum, and reorder levels established. When the item is sold the reorder quantity goes up, if the item is in a PO or Store Order the reorder quantity comes down. The item may or may not have sales. The min and max level range is established and when an item QOH falls below the min level, the item will be reported on the Reorder Level Report. The reorder level given in the master item would be added or subtracted accordingly.

If QOH is less than min quantity then Reorder level = Max Quantity - QOH - Pending Purchase and Store Orders

The Re-order quantity will be adjusted to make the quantity less than the maximum order quantity and in quantities consistent with the lot multiplier (the lot size multiplier closest to the maximum quantity without exceeding the maximum quantity).

The PO and Store Orders are considered for store or warehouse levels only. Not for venue-level reorders.

Formula:

Maximum Level-QOH-Pending PO-Pending Store Order(The number should be to the nearest factor of the Lot size multiplier)

Example: Minimum Level: 10 Maximum Level: 500 Lot size Multiplier: 3 Min Order Qty: 24

Let us assume that for item 1 QOH is 9 then it is under Minimum Qty then the Re-Order quantity will be calculated.

Pending PO: 70

Pending STO: 30

Maximum Level-QOH - Pending PO - Pending STO = 500 - 9 - 70 -3 0 = 391

391 is greater than Minimum Order and Lot size multiplier(3) closest to the 391(max level) without exceeding the maximum quantity = 390

If the quantity we got from the formula is not greater than the minimum order quantity then Qty will be adjusted to make it greater than the minimum order.

Last X Days

The last x days mode is selected for the domain(ALL)/venue/store, the master item screen does not need to have min/max levels set. For the item to be considered, it must have a sale or refund during the time period specified.

When a PO or Store Order is present for the item, the reorder level will be affected. The order level will go up if a sale is made and go down with PO and Store Orders.

If the sales in the specified period are greater than the QOH then the item will be in the Reorder Report.

If the lot size multiplier is set, the closest higher-end figure of the reorder level which is the multiple of the lot size multiplier is displayed.

Fixed Period

Fixed Period takes the average of a set time period to determine which items to be reordered.

When this mode is selected for the domain(ALL)/venue/store, the master item screen does not need to have min/max levels set. For the item to be considered, it must have a sale or refund during the time period specified. When a PO or Store Order is present for the item, the reorder level will be affected. The order level will go up if a sale is made and go down with PO and Store Orders.

If the sales in the specified period are greater than the QOH then the item will be in the Reorder Report. The time period must not be the same date (the start and end date cannot be the same day)

If the lot size multiplier is set, the closest higher-end figure of the reorder level which is the multiple of the lot size multiplier is displayed.

The reorder levels for Fixed Period are as follows :

Example : July 1st to July 09th Date range = 8 Days No. of Days = 30 Sales = 70 QOH = 40 PO Pending = 65 STO Pending = 20

AVG = 70/8 = 8.75

8.75*30 days =263

Formula: # of the item sold – QOH – PO - STO

263 - 40 - 65 - 20 = 138

138 items need to be reordered

Rounded to the closest lot size multiplier.

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