The Replenishment features in Inventory Management allow you to determine the appropriate quantity to purchase from a vendor based on current stock status, purchase and selling history, and projections. Here is the terminology used in Sage 500 to help you better understand it:
- Demand – Projected future usage for an item
- Working Days – Number of business days in an inventory period
- Daily Demand – Estimated daily demand for an item
- Projected Lead Time – Number of days needed to replenish an item
- Safety Stock – Provides protection against a stock out
- Order Point – Minimum level of inventory to be maintained
- Past Usage – Weighted average of the actual past usage of an item
- Trend Factors – Expected increases or decreases in the demand for an item
- Replenishment Position – Quantity needed to fill all obligations
- Target Order – Vendor requirements for ordering product
- Order Cycle – Average number of days to use enough product to meet a vendor’s target order
- Line Point – Additional items that should be included in a target order
- Total Cost of Inventory – Includes all costs associated with acquiring inventory (i.e., purchase price, replenishment cost, carrying cost)
- Replenishment Cost – All expenses associated with processing a purchase order line
- Carrying Cost – All expenses incurred maintaining stock
- Economic Order Quantity (EOQ) – The purchase quantity that results in the lowest total cost
- Min/Max Reorder Method - Items are ordered when the replenishment position falls below the Minimum Stock value and enough items are ordered to bring the stock up to the Maximum Stock value
- Maximum Reorder Method - Orders items when the replenishment position falls below the Maximum Stock value
- Manual Reorder Method - Items are excluded from the replenishment process and Purchase orders are manually entered