# EOQ & ROP Calculation ### Ranking Table - Product Ranking Table for Corporate and by Branch including required Turns and Safety Stock Factor based on Annual Sales Dollars or Units. - Use of dollars or units determined by billing parameter setting. ### Purchasing Parameters - Default Timer for new product added - Weeks Active - Number of Weeks with Activity - Weighting Weeks - EOQ and ROP rounding - ROP and EOQ corporate or store - Use Demand Smoothing - Internal Review - ROP/EOQ Use – DC or Corporate - Branch Replenishment from DC – B/S/N ### Ranking Calculation - Ranking calculated based on Unit Sales or Dollar Sales according to Billing Parameter setting screen 4 – Sales Rank Basis (U/$) - Run once for all locations - Calculate Active Weeks from first receipt date to current date - Ignore items without a first receipt date - Calculate sales value by week for weighting weeks using invoice costing based on billing parameter setting, screen 2 invoice costing Average or Last (P6) - Sum these values and the rank will set when the total sales value is less than the next value in the rank parameters. - The sum of the sales value for all branches is used to calculate the corporate sales rank ### Calculate EOQ Values - This is done for each branch separately - Age Week Sales - If Reorder Allowed = N, S or K do nothing - If Reorder Lock not 0 do nothing - Calculate the Active Weeks - Only done for products that have a first receipt date - Active weeks from First Receipt to current - If the Active Weeks is > Weeks Active parameter use the parameter value - If the Active Weeks is 0 do nothing - Calculate Annual Unit Sales = previous 52 weeks sales. - If Active weeks is < 52 calculate annual units as sum of previous 52 weeks \* 52 / Active Weeks. - Weeks with Activity = Weeks in Active Weeks that have sales not = 0 - If Weeks with Activity < Number of Weeks with Activity move zero to Vendor and Transfer EOQ - Assign the EOQ - Based on the ranking parameter for the part divide the annual unit sales by the turns parameter giving the EOQ Vendor and Transfer. ### Calculate Lead Time by Part - Use the number of receiving’s set on the supplier record. If blank or 0 then default of 8 is used - Calculate the average lead time for the most recent number receiving’s of the part. - Compare the average lead time to the highest number of days and add the lower of the difference or 25% of the average lead time. ### Calculate ROP Values - Use DC lead time from branch record. - If Lock value = 99 do nothing - Does not use RANK-CUTOFF value - Reduce the lock value by 1 - Calculate active weeks from first receipt date to current date - Sum the sales units for the Weighting weeks. - Compute the daily sales = total sales by week / (weighting weeks \* 6). It was decided early on that only 6 business days per week should be used for the daily sales calculation. - Using the sales ranking and lead time for the part calculate the Vendor ROP. Daily Sales \* (Lead Time + Internal Review Time). Round this value based on Purchasing Paramenter settings. Add safety stock percentage and round again. - Calculate the DC ROP value as Daily Sales \* DC Lead Time, then round based on purchasing parameter setting. Add safety stock percentage and round again. ### Calculate Corporate Values - Add the Vendor EOQ for all locations and put the total as the Corporate EOQ - Add the Vendor ROP for all locations and put the total as the Corporate ROP ### Daily Suggested Order - The daily suggested order calculation can be based the DC or Corporate ROP/EOQ - Recalculates for all parts each day with the exception of parts on outstanding suggested orders where the order quantity has been modified and not ordered yet. - Suggested order will buy direct to branch based on supplier setting - Do not order product set as N for reorder allowed unless there is a customer backorder. - DC available quantity for replenishment to branches calculated based parameter Branch Replenishment from DC. - Transfers it the quantity available is equal to or less than the ROP DC order the DC EOQ – Qty Available + ROP DC base on DC Available Quantity. Use branch purchase quantity for transfers - Corporate Vendor Orders compare the DC available quantity to the Corporate ROP and order when the available is less that the corporate ROP