How Micronet Calculates Stock Purchase Quantities for Automatic Purchase Orders

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How Micronet Calculates Stock Purchase Quantities for Automatic Purchase Orders

The Automatic Purchase Orders program in MDS provides a number of options for automatically calculating the quantity of an item that needs to be purchased.

The following examples are provided to help you understand how Micronet calculates these suggested stock ordering quantities given the different calculation options you can choose.

Technical Tip

When ordering for Simple Stock, the free stock is calculated based on the selections in the Free Stock Calculation - Purchasing field on the Inventory Configuration screen. Refer to "Edit - Program - Inventory".

Assumptions

The examples in this section are based on the following assumptions:

calculate average sales for the past 6 months

default lead time of 8 weeks

keep 8 weeks “cover” ideally of stock on hand.

Before you Begin

Before you read the examples in this section, you need to know the following details:

Micronet stores the Averages Sales Quantity per warehouse.

The Average Sales per warehouse is a “weighted” average (explained in detail in the examples below).

All items should have the minimum Reorder Quantity set to 1 to prevent non-whole quantities from being ordered (set in the Item master file – Purchasing tab).

All items need a valid Weeks Stock figure (set on the Warehouse Details screen, via the Item master file – Purchasing tab). In the following examples, the Weeks Stock would be set to 8 (= 8 weeks).

All items need a valid Average For figure (set on the Warehouse Details screen, via the Item master file – Purchasing tab). In the following examples, the Average For figure would be set to 6 (= 6 months).

Micronet uses the following calculation to determine the number of weeks:

= Number of weeks

where 4.33 is 52 weeks divided by 12 months.

Sales figures are calculated per month, yet purchasing figures are based on weeks.

Micronet tracks how long an item has been “stocked” at a warehouse and considers this when recalculating the weighted average if the Average For is less than the number of months the item has been on file (in stock).