So, it is important to select the appropriate Review Period. The behavior of the system depends on how often inventory is checked. The R,Q will always generate a reorder for exactly the value of Reorder/Order Up To Qty. ![]() The main difference between s,S and R,Q is that the s,S takes into account exactly how far below the reorder level the inventory is when the request for replenishment is generated. The Reorder/Order Up To Qty field is the maximum, or the number to which the inventory level is restored. When using this policy, the Reorder Point field is the minimum, or trigger level. When the inventory level on-hand falls below a minimum, s, the site will generate a request for a replenishment order that will restore the on-hand inventory to a target, or maximum, number, S. S,S is a minimum/maximum inventory policy. Mathematically, optimal levels can be approximately determined, but in most instances the current state is inputted, with excess being identified after the model is optimized. The Reorder/Order Up To Qty field will be the exact number of units reordered. When using this policy, the Reorder Point field is set as the trigger level. When the inventory level on-hand falls below a certain replenishment point, R, the site will generate a replenishment order for a certain quantity, Q, of this product. R,Q is a fixed replenishment point/fixed replenishment quantity inventory policy. Batching occurs when the replenishment orders accumulate during the Review Period ends and are then filled. Defining a Review Period can produce batching. Though it seems straightforward, demand flow can exhibit complex behavior, especially when combined with Review Period. By establishing an initial inventory level, the site will always replenish exactly what was consumed by actual demand, whether it was filled immediately, or left unfilled as a back order. However, you should still establish an initial inventory level. Therefore, the Reorder Point and Reorder/Order Up To Qty fields are not used in this policy. All requests are driven by the actual demand quantities received at this site for this product. Instead, every order that arrives at this site for this product will generate a request for a replenishment order for the exact same quantity. In demand flow policy, there is no strict inventory control. A one-for-one replenishment policy is used if one product is shipped, one is ordered to replenish. Demand flowÄemand flow is conceptually the simplest inventory method, but it is more difficult to implement outside of a just-in-time (JIT) system. Inventory styles are the method by which RQ, RP, and P levels are set. The following are sample Inventory Policies records: Site Name The method by which reorders are conducted. Amount of product to order at each reorder. Stock level at which to place another order for product. The amount of product the site initially holds. The product that can be held at the site. Inventory policies must have the following elements: For instance, if inventory is reviewed every day, then the reorder period is one day. Review periods specify the amount of time between analysis of inventory levels. ![]() If review periods are instantaneous, or if inventory is constantly monitored, then these two values are the same. If an order up to level is set, then the order is made of the difference between the desired order up to level and the current inventory. If a reorder quantity is set, then every order has a set amount purchased to replenish the inventory. ![]() The reorder quantity, or order up to level, specifies how much is ordered once reorders occur. Once inventory meets this level or goes below it, an order is placed. The reorder point is the inventory level at which more product quantity is ordered. With these three requirements, inventory can be handled in multiple ways, based on each site and each product if necessary. There are three main principles of inventory management: The primary concept of inventory revolves around keeping stock of a product and replenishing the stock as necessary. Because all non-customer locations have the potential to hold inventory, a policy must be defined to specify how the inventory is held. Inventory policies define product storage procedures for all non-customer locations.
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