Luminous

Below is an explanation of how the recommended order date is calculated, along with the equation and a couple of examples.

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Calculate Available Inventory: In this scenario, Available is defined as:

This gives you the total inventory that’s actually available for sale.

Determine Daily Sales (SaleVelocity60Days): The SaleVelocity60Days is the average daily sales over the past 60 days.

Calculate Expected Sales During Lead Time: Multiply the average daily sales by the LeadTime (in days). This gives the number of units expected to be sold during the lead time:

Compute the Surplus Inventory: Subtract the expected sales during the lead time from the available inventory:

Convert the Surplus into Additional Days: Divide the surplus by the average daily sales:

Determine the Recommended Order Date: Add the additional days to the current date:

1. Calculate Available Inventory: In this scenario, Available is defined as:
 
 
 This gives you the total inventory that’s actually available for sale.
2. Determine Daily Sales (SaleVelocity60Days): The SaleVelocity60Days is the average daily sales over the past 60 days.
3. Calculate Expected Sales During Lead Time: Multiply the average daily sales by the LeadTime (in days). This gives the number of units expected to be sold during the lead time:
 
 
4. Compute the Surplus Inventory: Subtract the expected sales during the lead time from the available inventory:
 
 
5. Convert the Surplus into Additional Days: Divide the surplus by the average daily sales:
 
 
6. Determine the Recommended Order Date: Add the additional days to the current date:

onhand, incoming, pending are used to calculate Available inventory.

SaleVelocity60Days is the average daily sales over the last 60 days.

LeadTime is the time (in days) it takes for a new order to arrive.

- onhand, incoming, pending are used to calculate Available inventory.
- SaleVelocity60Days is the average daily sales over the last 60 days.
- LeadTime is the time (in days) it takes for a new order to arrive.

- onhand: 100 units
- incoming: 20 units
- pending: 10 units
- Available = 100 + 20 − 10 = 110 units

- SaleVelocity60Days: 5 units/day
- LeadTime: 10 days

1. Expected Sales During Lead Time = 5 units/day × 10 days = 50 units
2. Surplus = Available − Expected Sales = 110 − 50 = 60 units
3. Additional Days = Surplus / SaleVelocity60Days = 60 / 5 = 12 days

- Inventory Data:
 - onhand: 100 units
 - incoming: 20 units
 - pending: 10 units
 - Available = 100 + 20 − 10 = 110 units
- Sales and Lead Time:
 - SaleVelocity60Days: 5 units/day
 - LeadTime: 10 days
- Calculation:
 1. Expected Sales During Lead Time = 5 units/day × 10 days = 50 units
 2. Surplus = Available − Expected Sales = 110 − 50 = 60 units
 3. Additional Days = Surplus / SaleVelocity60Days = 60 / 5 = 12 days
- Result:

- onhand: 200 units
- incoming: 0 units
- pending: 50 units
- Available = 200 + 0 − 50 = 150 units

- SaleVelocity60Days: 10 units/day
- LeadTime: 8 days

1. Expected Sales During Lead Time = 10 units/day × 8 days = 80 units
2. Surplus = Available − Expected Sales = 150 − 80 = 70 units
3. Additional Days = Surplus / SaleVelocity60Days = 70 / 10 = 7 days

- Inventory Data:
 - onhand: 200 units
 - incoming: 0 units
 - pending: 50 units
 - Available = 200 + 0 − 50 = 150 units
- Sales and Lead Time:
 - SaleVelocity60Days: 10 units/day
 - LeadTime: 8 days
- Calculation:
 1. Expected Sales During Lead Time = 10 units/day × 8 days = 80 units
 2. Surplus = Available − Expected Sales = 150 − 80 = 70 units
 3. Additional Days = Surplus / SaleVelocity60Days = 70 / 10 = 7 days
- Result:

This approach helps determine the last day you can wait before placing a new order, ensuring that the new stock arrives right when you’re about to run out.

Recommended Order Date

Step-by-Step Explanation

The Equation

Examples

Example 1:

Example 2: