How is the inventory reorder quantity calculated in the app
Assisty helps you manage inventory by providing reports on which items need reordering and in what quantities. Let's make sure we are on the same page as we get started.
Lead Time: Time taken by the supplier to deliver the order (days).
Inventory remaining days: how many days the product will run out of stock (days).
Order Cycle: Frequency of placing orders (days)
Fixed Order Quantity: A predetermined order quantity.
Minimum Order Quantity: The smallest quantity you can order.
Maximum Order Quantity: The largest quantity you can order.
Minimum Inventory Quantity: The least amount of stock you should have.
Maximum Inventory Quantity: The most stock you should hold.
Minimum Stock Cover Days: The minimum number of days' worth of stock you need (days).
Maximum Stock Cover Days: The maximum number of days' worth of stock you need (days).
Incoming Inventory: The inventory are in the purchase orders.
Adjusted trend: You can increase or decrease the forecast results by edit the adjusted trend parameter in the report. It's 1 by default. If you want to add 30% sales to forecast result, set the Adjusted trend as 1.3.
Average Units Sold per day
We calculate this metric based on the days of product published on Shopify and the range of selected historical period.
Adjusted Units Sold per day: the units sold per day after adjusted.
Safety Stock Level: The mininum inventory levels you wish to hold In Stock.
If you set the [Minimum Inventory Quantity] to the product, then the safety stock level will equals to [Minimum Inventory Quantity]. Otherwise, we will use the [Minimum Stock Cover Days] to calculate safesty stock.
Reorder Point: The inventory level at which a new order should be placed to replenish stock before running out.
Reorder Date: The estimated date to reorder
The reorder date is where the inventory on hand reaches the reorder point. So based on the averate units sold and current inventory, we estimate the reorder date.
Reorder Quantity: The amount of inventory a business orders when the stock level reaches the reorder point.
There are some rules of reorder quantity:
The reorder quantity are always between [Minimum Order Quantity] and [Maximum Order Quantity]
The summary of reorder quantity, inventory on hand and the incoming inventory must be between [Minimum Inventory Quantity] and [Maximum Inventory Quantity]
Then we use the formula below.
Replenishment Inventory Cost: the reorder amount at product cost.
Terms
Lead Time: Time taken by the supplier to deliver the order (days).
Inventory remaining days: how many days the product will run out of stock (days).
Order Cycle: Frequency of placing orders (days)
Fixed Order Quantity: A predetermined order quantity.
Minimum Order Quantity: The smallest quantity you can order.
Maximum Order Quantity: The largest quantity you can order.
Minimum Inventory Quantity: The least amount of stock you should have.
Maximum Inventory Quantity: The most stock you should hold.
Minimum Stock Cover Days: The minimum number of days' worth of stock you need (days).
Maximum Stock Cover Days: The maximum number of days' worth of stock you need (days).
Incoming Inventory: The inventory are in the purchase orders.
Adjusted trend: You can increase or decrease the forecast results by edit the adjusted trend parameter in the report. It's 1 by default. If you want to add 30% sales to forecast result, set the Adjusted trend as 1.3.
Formula
Average Units Sold per day
We calculate this metric based on the days of product published on Shopify and the range of selected historical period.
[Total Units Sold in the period] / [Days of product published]Adjusted Units Sold per day: the units sold per day after adjusted.
[Average Units Sold per day] x [Adjusted Trend]Safety Stock Level: The mininum inventory levels you wish to hold In Stock.
If you set the [Minimum Inventory Quantity] to the product, then the safety stock level will equals to [Minimum Inventory Quantity]. Otherwise, we will use the [Minimum Stock Cover Days] to calculate safesty stock.
IF [Minimum Inventory Quantity] > 0 THEN [Minimum Inventory Quantity] ELSE [Minimum Stock Cover Days] x [Adjusted Units Sold per day]Reorder Point: The inventory level at which a new order should be placed to replenish stock before running out.
[Adjusted Units Sold per day] x [Lead Time] + [Safety Stock Level]Reorder Date: The estimated date to reorder
The reorder date is where the inventory on hand reaches the reorder point. So based on the averate units sold and current inventory, we estimate the reorder date.
[Today] + ( [Inventory On hand] + [Incoming Inventory] - [Reorder Point] ) / [Adjusted Units Sold per day]Reorder Quantity: The amount of inventory a business orders when the stock level reaches the reorder point.
There are some rules of reorder quantity:
The reorder quantity are always between [Minimum Order Quantity] and [Maximum Order Quantity]
The summary of reorder quantity, inventory on hand and the incoming inventory must be between [Minimum Inventory Quantity] and [Maximum Inventory Quantity]
Then we use the formula below.
[Adjusted Units Sold per day] x ( [Lead Time] + [Reorder Cycle] ) + [Safety Stock Level] - ( [Inventory On hand] + [Incoming Inventory] )Replenishment Inventory Cost: the reorder amount at product cost.
[Reorder Quantity] x [Product Unit Cost]Updated on: 12/08/2024
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