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This routine allows you to calculate EOQ for an item/warehouse combination under simulated conditions.
This routine is extremely useful in helping you understand how EOQ is calculated. You can enter as many different sets of conditions as you want, and see how these affect the EOQ.
Note: The calculations you make here do not result in an update of the DC1 Inventory Control system. These calculations are simulated.
- Item
- Enter the item code of the item/warehouse combination for which you want to calculate simulated EOQ.
- Warehouse
- Enter the warehouse code of the item/warehouse combination for which you want to calculate simulated EOQ.
- Period start date
- Set to YES if you want to use the period start date for this simulation. Otherwise, leave NO to use todays date. This date is used for retrieving forecast from a certain date, to give an estimation of demand during a certain time.
EOQ calculation simulation (INVD5052)
On this panel you select the method, and establish the parameters that you want to use to calculate the simulated EOQ for the item/warehouse combination displayed in the header.
When you access this panel, data already exists for an EOQ calculation. This data is retrieved from Work with replenishment control codes. You can change any values on the panel, and click OK to recalculate a simulated EOQ.
Note: The calculations you make here do not result in an update of the Inventory Control system. These calculations are simulated.
Function keys
| Select replenishment codes | Use this function key to search for information on the replenishment control code key classes defined in Work with replenishment control codes. You can also use it to select a code from the program. If so, then the method and parameters connected to the code are defaulted in the applicable fields on this panel. The system also uses them to recalculate the EOQ for this simulation. |
- Select method
- Select the method you will use to calculate a simulated EOQ for this item/warehouse combination. The three methods that you can choose from are listed below. You can choose only one method.
- Wilson
- Set to YES if you want to use the Wilson method to calculate simulated EOQ for this item/warehouse combination. Otherwise, leave NO.
- Period dependent
- Set to YES if you want to use the Period dependent method to calculate simulated EOQ for this item/warehouse combination. Otherwise, leave NO.
- Demand control
- Set to YES if you want to use the Demand control method to calculate simulated EOQ for this item/warehouse combination. Otherwise, leave NO.
- Enter parameters
- Enter the parameters needed to calculate the simulated EOQ according to the EOQ method chosen above. You are required to complete certain fields below, depending on the selected EOQ method.
- Order cost
- Mandatory entry if the Wilson method or Period dependent method is selected. Enter the amount in system currency of the order handling costs associated with placing an order.
- Stock interest
- Mandatory entry if the Wilson method or Period dependent method is selected. Enter the stock interest amount reflecting the return on investment the company would receive if its capital was not tied up in inventory.
- No of months demand
- Mandatory entry if the Demand control method is selected. Enter the number of months demand that you want to cover with one purchase. The calculated EOQ is checked against this value.
- Minimum months
- Optional entry, but can be used for both the Wilson method and the period dependant method. Enter the minimum number of months demand that you want to cover with one purchase. The calculated EOQ is checked against this value.
- Maximum months
- Optional entry, but can be used for both the Wilson method and the period dependant method. Enter the maximum number of months demand that you want to cover with one purchase. The amount you enter must be greater than the amount in the Minimum months field.
- Enter additional parameters
- Several additional parameters are needed for calculating EOQ. These parameters are retrieved from DC1 Inventory Control and DC1 Distribution.
- Year forecast
- Displays the year forecast from the Inventory management item file for this item/warehouse combination, but can be changed.
- Cost price
- In this field you can enter another cost price to see how this will affect the EOQ. If you leave this field empty, then the retrieved cost price will be displayed in the second Cost price field.
- Cost price
- Displays the cost price for this item/warehouse combination. Note: This field will only be calculated if one of the Wilson or Period dependent fields was set to YES.
First the system will determine if the item is manufactured or not.
- If the item is an MFG item with Item type set to 1 or 2, then the cost price is updated with average cost from the Inventory information or Warehouses panels in the Item file (see note below).
- If average cost is zero, the item cost price will be retrieved from the Cost price field in the DIS control file.
If the item is non-manufactured, the cost price will be retrieved in this order:
- If a supplier agreement price or contract discount exists in the Supplier agreements file, this price will be retrieved.
- If a supplier discount exists in the Supplier discount file maintenance this price will be retrieved.
Finally, the system will look to see if a new price exists on the Purchase prices panel in the Item file.
- If the date of the new price is less than or equal to today’s date, the new price will be used.
The purchase unit price is converted to stock unit price and purchase price is converted to system currency.
- If there are no quantity discounts, the cost price is updated with Act price 1 on the Purchase prices panel in the Item file.
- If quantity discounts do exist, the system will retrieve the optimum price per EOQ.
- If the system has still not found a cost price, the average cost from the Inventory information or Warehouses panels in the Item file is retrieved and used to calculate the EOQ.
Note: If Cost per warehouse is YES in the DIS control file, then the data is retrieved from the Item/Warehouses level. If NO, the information is retrieved from the Item file.
If the system finds a supplier discount, supplier agreement or quantity dependent price in the cost price retrieving process, the price description will be displayed directly below the Cost price field. The description of this field is retrieved from Work with item price codes.
Code Description 210 Suppl agreement, price 211 Suppl agreement, line val disc 261 Purch. price according to qty 1 262 Purch. price according to qty 2 263 Purch. price according to qty 3 264 Purch. price according to qty 4 265 Purch. price according to qty 5 281 Discount supplier/item group Note: The description of the Item price code may be different in your system.
- No of periods/year
- Displays the number of forecast periods per year, as defined in the IC control file.
- No of workdays/per
- Displays the number of work days per forecast period, as defined in the IC control file.
- Calculated value
- After you have entered the data for this simulation, click OK to display the simulated EOQ in the field below.
- EOQ
- Displays the simulated EOQ value calculated according to the parameters that you established in the above fields. Note: If you chose the Period dependent method, and manually changed the value in the Year forecast field above, then the EOQ in this field is an estimation. This field cannot be changed.
- No of days to cover
- Displays the number of days consumption that each purchase should cover. This is only calculated when you have selected the Period dependent method.
- Discount level
- Displays the discount level the system found during the cost price retrieving process.
- Discount quantity
- Displays the discount quantity the system found during the cost price retrieving process.