There are many parameters that can be used to help calculate Reorder Points. They can set how far back in time to base calculations on, what the maximum number of weeks’ supply should be, what the minimum quantity should be, and more. Here is an explanation of each parameter.
Last X Weeks: Lookback period in weeks that will be evaluated to determine average weekly sales.
Min Weeks: Desired weeks of supply to use as the Reorder Point. If an item has an average sales velocity of 1 per week and Min Weeks is set to 10, Reorder Point would be calculated and set to 10 units.
Max Weeks: Desired weeks of supply to use as the Target Quantity. If an item has an average sales velocity of 1 per week and Max Weeks is set to 14, Target Quantity would be calculated and set to 14 units.
Curve Type: Curves can be an extremely powerful tool for calculating seasonal lifts and falls. If a curve is selected, the calculation of the average weekly velocity of an item is much more sophisticated. The quantity will be normalized to the curve. There are three types of curves:
Item Filter: Calculates the curve based on the performance of the entire item filter across the whole organization. If there is not enough data, it will fall back to the Location curve type.
Location: Calculates the curve based only on the location the item sold in.
Organization: Calculates the curve based on sales across the entire organization.
Multiplier: Factor applied to the calculated Reorder Point and Target Quantity. For example, if a Reorder Point is calculated to be 10 and there is a Multiplier of 0.5, the Reorder Point will be adjusted down to 5. This is useful for accommodating increased or decreased demand due to general market conditions.
Minimum Qty: The absolute minimum units to set as the Reorder Point or Target Quantity. This is the last calculation applied. If a calculated Reorder Point or Target Quantity is below this threshold, the calculation will be adjusted up to the Minimum Qty. For example, if it is determined that an item’s calculated Reorder Point is 4 but the Minimum Qty is set to 5, the Reorder Point will be set to 5.
Adjustment Qty: Quantity to add or subtract to a calculated Reorder Point Plan and Target Quantity. This is different from Minimum Qty because the Adjustment Qty is ALWAYS applied. Adjustment Qty is applied BEFORE Minimum Qty changes are considered.
Lead Time in Weeks: If targeting a selection of items for which a lead time is known, use this field to specify that. This is particularly important when dealing with plans that utilize curves. For example, if reorder points are calculated at the beginning of a peak selling season but there is a lead time that would cause items ordered to be delivered after the selling season ends, this setting prevents over-ordering.
Auto Exclude Markdowns: Check this box to instruct the plan to set the Reorder Point and Target Qty to 0 for any items where the Original Price is greater than the Current Price.
Auto Run: Check this box if this plan should be automatically run.
Day of Week: If Auto Run is checked, this is the day of the week the plan will run. Mondays are recommended for the most accurate weekly calculations.
Time to Run (Eastern Time): If Auto Run is checked, this is the time that plan will run. Due to errors with Heartland Retail, setting this to 7:00 AM (Eastern Time) will not allow this utility to run.