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