- Select the Work with replenishment control codes menu item.
- On the first main panel, select the control key class for which you want to define replenishment codes.
- The second main panel displays the replenishment codes that have been created for the selected control key class, if any. Click Add.
- On the Work with replenishment control codes detail panel, the following fields are mandatory:
- Key value
- Enter a key value. For each warehouse and key value in this control key class, you define a method and the parameters to be used for calculating EOQ.
- Note: The key value must be a valid code for the control key class displayed in the header. For example, if you are entering data for the item control key class, you must enter a valid item code.
- Note: This rule is valid for each control key class except the nickname class and default class. The nickname class allows you to define an arbitrary name that is not connected to a key within the system.
- Description
- Enter a description of the new record.
- Wilson
- Indicate if you want to use the Wilson method to calculate EOQ. This method seeks to minimise the total cost of ordering and holding inventory over the year. It works best for items that have a stable demand because it does not handle demand fluctuations.
- Period dependent
- Indicate if you want to use the Period dependent method to calculate EOQ. This method is similar to the Wilson method. The difference is that it takes fluctuations in demand into account.
- Demand control
- Indicate if you want to use the Demand control method to calculate EOQ. This method is a simple means of calculating EOQ by expressing it as a number of period demands.
- Order cost
- Mandatory entry if you have selected the Wilson method or the Period dependent method. Enter an amount in system currency indicating the total order handling costs associated with placing a purchase order line. This is very difficult to calculate, but a common rule of thumb is 3 GBP to 15 GBP expressed in system currency. Costs might, for example, include:
- Time spent on the order line by the purchaser
- Telephone cost
- Computer processing costs
- A share in freight costs
- A share in fixed overhead costs for the purchase department
- The higher the order costs, the higher the EOQ because as it becomes more expensive to make a purchase, you want to make fewer purchases with larger quantities in each purchase.
- Stock interest
- Mandatory entry if you have selected the Wilson method or the Period dependent method. Enter a stock interest amount indicating the return on investment the company would receive if their capital were not tied up in inventory. This is normally set to the official discount rate plus 5 to 10%. Theoretically, it should be the highest possible rate of interest that you could get from any other investment than investing money in stock. The higher the stock interest rate, the lower the EOQ because it becomes increasingly more expensive to have stock on hand.
- No of months demand
- Mandatory entry if you have selected the Demand control method. Enter the number of future months’ demand that you want to use as an EOQ.
- Minimum months
- Optional entry, but can be used for both the Wilson method and the Period dependant method. Enter the minimum number of future 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 future months’ demand that you want to cover with one purchase. Note: The amount must be greater than the amount in the Minimum months field.
- Maximum deviation %
- Enter a percentage value for the allowed maximum deviation between the present period EOQ value and the previous period EOQ. This value is used to determine if an EOQ error has occurred during calculation of EOQ. Note: If this field is left blank, then the system has no way to alert you to deviations in EOQ.
Select method
Select one of the following methods for the calculation of the EOQ:
Enter parameters
Depending on the selected calculation method you must complete certain parameters. The parameters are:
Click OK. Exit the routine.