Options.You will find a general description of how to manage lists in MONITOR in the chapter Managing Lists in the System under General in the MONITOR Basics guide.
What Does This Procedure Do?
This is where you calculate the Economic Order Quantity (EOQ) of the parts. The purpose is to calculate a quantity that will minimize the cost of stock-keeping and purchasing. This quantity is later used for requirements planning and calculations. Furthermore, you can create a reasonability check of the lot sizing of parts with the lot sizing rule F Fixed quantity, in view of fluctuations in the consumption of the part in question.
You select the list and configure calculation settings under the Create tab. After the calculation, the calculation result is presented in a list. Under Printout samples you will find printout samples and explanations of the values.
What is EOQ?
When planning purchasing and manufacturing, you are often confronted with the question: What is the most appropriate quantity for this purchase/manufacturing process? To purchase or manufacture large volumes on few occasions will create high storage costs (also known as "inventory costs"). If you place lower volumes on more occasions, you do lower your storage costs but considerably increase your ordering costs. Somewhere between these, there is an optimal order quantity that will minimize the total of your storage costs and ordering costs. This quantity is called Economic Order Quantity or just EOQ.
There is a formula used to calculate this quantity, called "Wilson’s formula" or the "square root formula". This formula is used to calculate the EOQ of a part, with the specific purpose of minimizing storage and ordering costs.
The EOQ is often used in MONITOR. On one hand it is used during requirements planning, when you obtain a suggestion to purchase/manufacture a part after a netting run. The system creates a suggestion based on the part's EOQ if you have entered the lot sizing rule F (Fixed quantity).
EOQ’s are also used during pre-calculations for parts, where the system suggests that you base the calculation on the quantity that is equal the part’s EOQ. This is done regardless of the lot sizing rule applied. The system also suggests EOQ during manufacturing order registration.
What Can You Calculate in this Procedure?
This procedure calculates the parts EOQ, based on two calculation methods. One method is based on planning formulas where the Wilson's formula is one of them. You can create planning formulas in the Planning Formulas procedure in the Global Settings. The other calculation method is Orders / year. The procedure also performs an Adequacy check to see whether it is suitable to use the lot sizing rule "Fixed quantity" in each case, taking the part's previous consumption into consideration.
After calculating the EOQ, it can be saved as a planning parameter for the part, while the Adequacy check appears as a warning in the list, which can be printed for further analysis.
What Update Options Exist for this Procedure?
After calculating the EOQ, it can be saved in the part's information. You can also edit or modify the calculated EOQ value before you save. The system can either save the values automatically directly after calculation if you, under the Create tab, has checked the options according to the image below under the heading Options.
Can Any Charts Be Displayed?
There are no charts or graphs available in this list.
Window Functions
Read more about the Window functions under Window Functions in the MONITOR Basics guide.
