2.3.2-1 Forecasting and Calculating Ordering Amounts
Hello friend,
To be reasonable, I am confusing:
- why (c) should plus (d) - (e) …… = (f)?
- why not only: (d) - (e) = (f)
Because if (d) + (c) will be 4 months, not 3 months
As I am understanding the VDO, Re-order amount should be: (average use of 3 months x 3 months + 10%) - stock on hand = new order.
Thank you for your sharing :)
Comments
Hello Mixi , ideally it is true but practically we may not get at specified lead time ,delay may ocuur . So we have to reserve (C) amount of supply in case we couldn't get as per lead time , .But consider also expiry date due to over stock not happen
This is still tough homework
When the going gets tough let the tough get going. It shall be well.
Really tough one, looking forward to the live webinar
Dear Award, thank you very much for your information.
Hi Mixi please kindly note that (c) is the three month average that guides us in the forecasting based on the correct estimation of our daily/monthly consumption. However (e) is the physical counting of our stock available which could be more or less than (c) hence adding (c) to the equation gives you the actual stock at hand
let us first define the variables for clarity.
f= Quantity to be ordered
c= Number of items needed per month (Reserve Quantity)
d= Minimum Stock required for a three-month lead time (Reorder Level)
e= Stock on hand (physical inventory)
if f=(c) + (d) - (e)
=> Quantity to be ordered = (number items needed per month + three-months consumption) - stock-on-hand
If (f)= (d) - (e) => Quantity to be ordered = three-months consumption - stock-on-hand
Logically, we order when stock level reaches minimum stock level (e). You could be right, but I am assuming that this formula is trying to introduce a buffer stock factor in the calculation
Well clarification
Hello Award, you are reasonable.. Thank you for your explanation.
I am better understand now.
Thank you ☺️
Dear Clement,
Yes... Very clear for me and thank you very much for your attention to sharing your understanding.
It's good to explain to each other like this so we can together understand in the same direction.
Thank you very much☺️
Dear Daron,
You're right... Thanks a lot for clarification.
Thank you very much🙏