Formula

You will find the formulas for the calculations on separate row numbers. In the standard system you can only switch between the predefined initial formulas Standard and Advanced.

You switch formula by using the Info Menu which you access by right-clicking. Click on a formula row to change the formula on that specific row. If you right-click between the rows, you can change formula on all rows that have two collections of formulas.

Below you will find a description of all predefined standard and advanced formulas that is included in the procedure, presented per row number. You will find explanations of all variable abbreviations that exist in the Variables window, that you access under the Info menu.

1 Prepare annual budget; exponential smoothing (QPY)

85 % of previous forecast and 15% of previous month's invoicing. The standard formula and the advanced formula are the same.

(0.15 * ASM * 12) + (1 - 0.15) * OQPY

2 Prepare annual budget, calculate with seasonal fluctuation (budget chart) (QPY)

Increases or decreases depending on the month's value in the budget chart in relation to 8,33% (100 / 12). The standard formula and the advanced formula are the same.

QPY * SF * (12 / 100)

3 Work days per year (WDY)

Standard: The number of work days per year is a fixed value. Used to calculate the consumption per day based on the annual quantity (ADU = AV / WDY).

250

Advanced: The work days per year are according to the company calendar.

WDYC

4 Calculate stock levels; safety time (ST)

By using the advanced formula you can calculate the safety time for parts for SRS. Otherwise, the safety time is a term used in the Run Netting. In the SRS the safety time is only one part amount in the formula for safety stock (SS). There is no standard formula calculating safety times.

BS * SQRT(LT / 20)

Defined as the basic safety time (BS) per ABC code x the square root of lead time (LT) divided by 20. A high lead time generates a greater uncertainty. The square root provides non-linearity. 20 is the number of work days per month. The basic safety time (BS) is used to calculate a safety stock in number of days per ABC code.

5 Calculate stock levels; safety stock (SS)

Standard: The safety stock should be dimensioned in proportion to uncertainties in the consumption and lead time. The uncertainty in the consumption is a measure of the forecast error.

2.33 * 0.6 * ADU * SQRT(LT)

The formula is based on the following formula used to calculate safety stock (SS). Source: "Logistikens grunder" by Kent Lumsden.

The calculation formula used to calculate safety stock.

The formula applies to the normal distribution of the consumption and lead time spread. By using different values for Z (see table below), you can alter the service levels. The value 2.33 is selected by default in the formula.

For it is the forecast error and daily pace (ADU) that describe the uncertainties in the consumption. It is assumed that the forecast uncertainties are the same for the entire range of parts. The formula uses 0.6 (60%) as the estimated forecast error.

By using values other than 2.33 and 0.6, you can calculate the safety stock level for different service levels and forecast uncertainties.

Use the basic safety time (BS) to calculate the service level/forecast error per ABC code.

Advanced: In the advanced formula the safety stock is equal to the safety time x daily pace.

ST * ADU

Calculate stock levels; reorder point (ROP)

The purpose of the reorder point is to define at which stock level it is time to place an order. This is used in the SRS.

Standard: Reorder point is the safety stock + consumption during the lead time.

SS + LT * ADU

Advanced: The reorder point is the safety stock + consumption during the lead time, rounded-up to the nearest multiple for the part's round-off quantity.

gf_round( SS + (LT * ADU) , 0)

7-8 Refill list Purchase/Manufacturing; refill signal (Filter)

Defines when a part shall be included in the Refill List - Purchase and Refill List - Manufacturing. You can enter several formula rows that will be used as a filter in these procedures.

Standard: When the balance + the placed orders is less than the reorder point. The placed orders must be included in the calculation so that the part will not appear again before arrival.

BAL + ORQ < ROP

Advanced: The same as the standard formula, but only with orders within the lead time.

BAL + ORQLT < ROP

Standard: Same as the advanced formula, but here you have the possibility to only include parts that are below safety stock.

BAL + ORQ < SS

Advanced: The same as the standard formula, but only with orders within the lead time.

BAL + ORQLT < SS

Standard: As an alternative for parts with a negative balance (below zero). Not very useful in combination with the SRS. More useful in the Run Netting, but then it will not appear as this formula.

BAL + ORQ < 0

Advanced: The same as the standard formula, but only with orders within the lead time.

BAL + ORQLT < 0

Advanced: You will find an additional row if you have selected the option Load Initial Formula [All] for the Advanced formula under the Info Menu. The reorder point is not only calculated as the ROP (calculated consumption within the lead time), but it is also calculated as the maximum of the calculated consumption and actual consumption.

AVAILQ < ROP - ADU * LT

9-10 Refill list Purchase/Manufacturing; order quantity (NRQ)

The order quantity that the refill list will suggest.

Standard: EOQ is the economic order quantity registered for the part.

EOQ

Advanced: Instead of only suggest an order size equal to the EOQ, an order size will be suggested that will make sure that the balance during arrival theoretically should be EOQ + SS. This is done by calculating ROP - BAL and add it to the EOQ. ROP - BAL is the value that has fallen below the ROP at the time of the order suggestion.

EOQ + ROP – BAL

11-12 Refill list Purchase/Manufacturing; round-off (OS)

Standard: The round-off rule for the calculated order quantity NRQ. No round-off takes place when using the standard formula.

NRQ

Advanced: Rounds-up to the nearest multiple according to the part's round-off quantity.

IF(MPQ > 0 , MPQ * gf_round(NRQ / MPQ , 0) , NRQ)

13-14 Refill list Purchase/Manufacturing; priority (Sort)

The priority term regarding how to sort parts in the refill list. You can enter several formulas that can be used as alternate classification alternatives in the Search Form.

Standard: The balance divided by the daily pace. Provides a value for how many days the balance will last.

BAL / ADU

Advanced: The number of days above or below the safety stock that is covered by the balance for a future lead time. (This value can both be positive or negative.)

Round((AVAILQ - ROP + ADU * LT) * WDY / AV , 0)

35 Calculated lead time

Calculated lead time is used as an alternative to the variable lead time LT, if the lead time which is calculated in the Refill List - Purchase also should depend on the supplier's transport time TrT and if the part goes through receiving inspection QI. The formula provides parts with receiving inspection a calculated lead time that is: lead time + transport time + 3 days. If the part does not have receiving inspection, the calculated lead time will be: lead time + transport time + 2 days.

if(QI=1,LT+TrT+3, LT+TrT+2)

70 Calculate EOQ; formula (EOQ)

The economic order quantity (EOQ) is calculated using the Wilson formula. The standard formula and the advanced formula are the same.

IF(artikel_art_std_pris > 0 AND HC > 0, SQRT((2 * OC * AV) / (HC * artikel_art_std_pris)), 0)

80 Inventory analysis; average stock (AVGS)

Calculating the average stock, which is the safety stock + half of the EOQ. The standard formula and the advanced formula are the same.

SS + EOQ / 2

200 Throughput time including material procurement?

Standard: Throughput time according to the pre-calculated value for S and M parts.

No

Advanced: Throughput time according to the pre-calculated value for S and M parts + lead time for incorporated P parts with the lot sizing rule L (Lot-for-lot).

Yes

of