Reordering Policy

When I select ORDER option in reordering policy . All fields that means  1.      Safety Stock Quantit 2.      Reorder Point  3.      reorder qty  4.      Maximum Inventory  5.      minimum order qty  6.      maximum order qty…. are Enabled.Why it is going like this.  I am very curiosity to know when  companies plan to select  Order option  in Reordering policy .  Could any expert can throw some light on this issue.  Thanks and regards

 

Order
The program generates an order for each individual requirement, and does not use the reorder cycle.
When you use this reordering policy, the program creates an automatic reservation between the requirement and the corresponding replenishment order proposal. This will preserve the customized information on the relevant orders and link them for inventory and costing purposes. (Note that creating a manual reservation is the standard way for a user to set aside items in inventory and designate them for use in a particular order.)
If you select this option, the program disables all planning parameter fields that otherwise would be used to calculate the order proposal quantity.

 

it is available in the help if u press F1 on the field

Thanks.

 

 

 

But please keep in mind why the people throw quries to  forums, because they cannot understand the meaning even read the F1 help. So they try to put the quries in front of EXPERTS who already done lot of implementations to get practical knowledge.

 

 

So don’t try to give the F1 help. We are entrading the  practical explanations

 

Companies use the order scenario when they do not hold stock of the item, so they build or purchase for the exact requirement. This might be an expensive item that cannot be stored. The industries I have encountered this in vary massively - the defining characterisitc is the item itself, essentually if the raw material is batch ordered or is held in stock you will not order it in this manner.

Thanks  Adam,

    This is what I am expecting. I know u are the legend about sales , purchase, Inventory, Manufacturing.  I am very grateful to u , because u are giving practical explanations to us.In the same way could  u explain when firms will like to have  the policy – Lot-for Lot.

Could u explain this one also .

    Thanks and regards

 

Flattery will get you a long way

Lot-for-Lot is a strange one, theoretically if you make on a lot-for-lot scenario you are planning to demand, however Navision allows you to consider inventory or not. In some instances you could make to demand and retain stock, so you would want the system to tell you of the inventory, however in other systems, say for example project/job manufacturing you may want to produce the goods in a lot size, but not consider stock as any surplus cannot be used as it is tied to the demand whether it is used or not. There are no reorder points to this policy as theoretically you would not hold stock, but it allows you to set a safety stock. I have not yet come across this specific need, so I cannot really comment any more, but I would prefer to use a different policy configured differently depending upon the demand.

Thank U Adam Roue,

This is the my last query to close this post.

In the same way  could u explain the  Fixed Reordering policy, maximum Inventory Policy.

Please give practical explanation to understand about these two policies.

thanks and regards

 

Fixed reorder is one of the classic reordering profiles, it plans when a point of inventory is broken (the reorder point) and then plans against order modifiers. Businesses that hold stock to handle demand fluctuations or to give a good customer service level with a reduced leadtime will use this based upon the needs of each item. You will see this as applicable to 50% of the items you will come across (probably!!)

The maximum quantity tries to take the stock to the maximum point when the reorder is needed. This is where you are trying to utilise space or reordering metrics which make the best fit for the profile. Not one I have encountered today, people do not like holding lots of stock. It is also the policy with the most listed issues, I believe, from a Microsoft perspective.

Thanks alot Steven,

 One small doubt  for example  "A " is manufacturing firm. It has only 3 type of items.

1.Raw material (Costly items). So which reordering policy  we use ?

2. Raw material ( very cheap that means cotton, screws, bolts...) so which reordering policy we use ?

3.from Raw matial  we get the finished product ( this is firm main one and only  product ) . that  item with 3 colours. they defined the items with variants in item card as a seperate item.

So for this item which reordering policy we use ?

finished goods ( very costly ) items which reordeing policy applicable ?

Please explain this one ....................

 Thanks , thanks , thanks, and thanks........................................

I am very very grateful to u........................

 

that will depend on the suppy lead times, if you have short times for replenishment (purchase for raw or manufacturing), you can have "order" as policy for the costly items.

in case you have to maintain minimum stocks of each item, then Lot-for-lot would be fine

 

As Romeo says it depends upon your lead times as well as the finiancial consideration of holding the stock, and if it becomes obsolete. So lets say you have a raw material on an 8 week leadtime and your market dictates you deliver in 4 weeks and it takes two weeks to assemble, you therefore need a level of stock holding to cover these.

So the answer is it depends. As for the cheap raw materials get the suppliers to line feed the stock directly and do not plan for them at all!!

Personally I prefer the fixed reorder policy as I know it works well. But where I make or buy for the demand I would use the order selection. That said there is nothing wrong with lot-for-lot, but I prefer a reorder point concept at a personal level. I always avoid the maximum policy, it seems to fall over in many ways!

Thanks Adam Roue,

U wrote  Personelly I prefer Fixed Reorder policy. that means for all item s u prefer this policy ?Please let me know.

And more thing I could understand all reordering policies except Lot - for Lot.

I am still getting some confuse on the Lot - for-lot . FOr what items we use Lot for Lot.

Please let me know.

thanks and regards

I do not prefer the policy for "all" items, naturally the demand patterns affect the consideration here, but if it fits into the policy I would use it because the fixed reorder policy is easy to explain, conceptualise and it works.

Again you have to disconnect the items from the policy I could say any item fits in lot-for-lot in some circumstances and make a justification for it.