Today’s tutorial is an in-depth overview of how to use the Up To Replenishment method for purchasing. Up To is one of the most common Advanced Forecasting methods in Prophet 21.
What is an Up To Item in P21?
There are four main calculations that make up the Up To Replenishment method in Prophet 21.
- Order Quantity: The calculations for Net Stock and Order Point both factor into this final calculated number.
- Required Units: This fourth calculation only applies to a purchasing unit of measure with a different unit size or a case of items.
We have already done an in-depth tutorial on the first calculation, Net Stock (learn about Net Stock here). This training focuses on the other three calculations in the Up To Replenishment method: Order Point, Order Quantity, and Required Units.
How to Calculate Order Point:
Order Point adds your Lead Time Days, Review Cycle Days, and Safety Stock Days into one number. The calculation then multiplies that number by the Daily Usage.
- Daily Usage: The Forecast Usage for the next month is divided by the calendar days of the month you run it in.
- Lead Time Days are either the Calculated Lead Time or Published Lead Time on the item.
- Review Cycle is how often you look at this item or product line. This video tutorial covers where you can set Review Cycle and explains the factors that control it.
- Effective Safety Stock Days for this item are set to thirty straight days. This video tutorial explains Safety Stock Days and how to set them in Prophet 21.
Example: Add 45 (Lead Time Days) + 14 (Review Cycle Days) + 30 (Safety Stock Days) together. That combined number is multiplied by the Daily Usage for a Calculated Order Point of 376.
- When you move to the bottom of the Order Point calculation, you will find the MAX calculation. Right beside the MAX is an Item Order Point (in this example, the Item Order Point is 100).
- Item Order Point is the manual Order Point (or Min) on an item.
- This function takes the Max (The greater of the two numbers—in this case, the calculated Order Point) and moves it further down through the calculation.
How to Calculate Order Quantity:
Order Quantity has several different factors that play into the calculation.
- The first calculation is the Max.
- This calculation takes your listed Period Usage (your forecast usage) and multiplies it by the set minimum Periods to Supply (months in this instance).
- ABC Class is an important factor that affects the Periods To Supply number.
Example: The Max Calculation takes the listed Period Usage of 130.9900 and multiplies it by three (months) Periods to Supply and gets a result of 393.
- The second calculation works with the Max and the Order Point we got in the previous calculations (in this case, the Calculated Order Point).
- The Max shows that the Order Quantity is based on whichever is the greater number between Periods To Supply or Order Point. That number will move down to the final part of this calculation.
Example: Since the Calculated Order Point is the greater number, the value of 393 moves down. And to the right, it subtracts the Net Stock value found in the very first calculation. The final Order Quantity of 250 is then populated on the far left of this screen.
How to Calculate Required Units:
The three main calculations for the Up To Method are the Net Stock, Order Point, and Order Quantity. There is also a chance for a fourth calculation though.
If your preferred purchasing method was a CASE of individual eaches, you would have a final calculation for Required Units.
The first calculated number would be divided by the unit size, which would tell you what your required units were.
Example: If I had ten items in a case, and my Order Quantity was the 250 we calculated above, I would order twenty-five cases.
However, the Required Units calculation does not apply in our previous examples because the required units were in Each or EA.
The Up To method is a little bit more complicated than Min Max, but it is an incredibly useful process to know. I probably have about a million monthly conversations with Atlas P21 customers about it.
You simply need to understand how Lead Time, Review Cycle, Safety Stock, even the manual Min (Order Point), and of course, Net Stock, which is the base of all these purchasing methods play into this calculation. And Prophet 21 does an excellent job of breaking down the formulas on the screens.
Continue Learning: How to effectively manage your inventory using MIN/MAX.
If you have ideas on other topics for similar tutorials or have a different video you want to see, comment below.
And if you need some in-depth help with using purchasing in Prophet 21, contact us for a free consultation.