Below is the formula used to generate Order Level and Stock for an Automatic Purchase Order.

Total Days (TOT.DAYS) = Total days (selling days) which are calculated from Sales Periods entered.

Quantity Sold (QTY.SOLD) = Quantity sold during Sales Period entered.

Sold per Day (SOLD.DAY) = QTY.SOLD / TOT.DAYS

Order Frequency (OF), Lead Time(LT) & Safety Stock (SS) = Values originating from Vendor file.

Order Level (OL) = SOLD.DAY x (OF + LT + SS)

Stock Level (SL) = OL + (SOLD.DAY x (LT + SS)) + 1

Quantity on Hand (QOH), Quantity on Order (QOO), Quantity Back Ordered (QBO)

Quantity Available (QA) = QOH + QOO – QBO

Quantity to Order (QTO) = SL – QA

Example

OL = 2 x ( 30 + 14 + 3) = 94

SL = 94 + (2 x (14 + 3)) + 1 = 129

QA = 79 + 20 - 10 = 80

QTO = 129 - 80 = 49

The Automatic Purchase Order would be for 49 items. If this part is ordered in Standard Packs of 10, and the percent Standard Pack was set up in “Purchase Order Setup,” the Purchase Order would order 50. Order Frequency, Lead Time and Safety Stock are in Business Days. Business Days are calculated based on the number of days of the week set up in “Location Entry” in SYSTEM MANAGEMENT.