About Re-Order Levels

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About Re-Order Levels

The Re-Order point is established so that the system can automatically create requisitions for parts that have reached a certain quantitative level in inventory.

Purchasing action can then be considered. Re-Order levels are defined at the P/N level (Settings/P/N Master/Inventory Level Button).

The Re-Order Level that is calculated by the system is a result of the following formula:

INV_reorder equation

Formula Name

Formula Description

Re-order Level

[The number of parts that have been issued in the past year divided by 365 days] times [Lead days for the P/N's Vendors (which is the average taken from the Vendor P/N Information window in Settings/ Update/P/N/ Interchangeable Button/ Cost Button/ Lead Days field). It calculates the average lead days regardless of Condition or Vendor in case the user has several set up for the P/N.] * [Poisson Factor].

Note: The formula that is used to calculate the Re-order Level includes the Poisson factor.

The Poisson Factor number represents the service level required for the part. A specific Poisson Factor number is associated with each specific “percentage of probability that a part will be available in inventory”. The Poisson Factor numbers and their associated percentages are set up in Settings/Explorer/System Transaction Code/Settings/Poisson Factor (80% Service Level, 90%, 95% etc.).

The Poisson Factor Equation follows.

INV_equation poisson factor

Where 'U' equals the mean, 'x' is the sample/population and 'e' is equal to a given number of 2.718.

Examples:

Service Level	Poisson Factor	Service Level	Poisson Factor
50%	0.00	90%	1.28
55%	0.13	91%	1.34
60%	0.25	92%	1.41
65%	0.39	93%	1.48
70%	0.52	94%	1.55
75%	0.67	95%	1.64
80%	0.84	96%	1.75
81%	0.88	97%	1.88
82%	0.92	98%	2.05
83%	0.95	99%	2.33
84%	0.99	99.5%	2.58
85%	1.04	99.6%	2.65
86%	1.08	99.7%	2.75
87%	1.13	99.8%	2.88
88%	1.17	99.9	3.09
89%	1.23	99.99%	3.72

The Poisson Factor field must contain a valid code in the P/N Master (Settings/Update/P/N/ Inventory tab) in order for the system to make correct Re-Order Level calculations. If the Poisson Factor field is left blank, the system will not make a calculation for that particular P/N.

Centralized Location option (Location/ Update/ Location):

Centralized Location – This location will be the main warehouse for parts marked accordingly (in PN Master). Only one location can be marked as centralized location. When working with a centralized location, the average usage of parts in outstations will also be taken into consideration when calculating the reorder level.