Calculate ROQ/ROL/Safety Stock
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This page allows you to estimate the reorder quantity, reorder level and safety stock of the items stored in the warehouse. Tell me more...
Select the " Calculate ROQ / ROL / Safety Stock " link under the "Stock Maintenance" business component
The “Calculate ROQ / ROL / Safety Stock” page appears.
Enter the following in the Header:
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Calculation For |
Use the drop-down list box to specify whether you wish to calculate the ROL, ROQ and safety stock for all the warehouses in the OU or a single warehouse. The “Calculation For” field can take the following values:
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Warehouse Code |
A unique code identifying the warehouse (Alphanumeric, 10). Ensure that this field is not left blank if “Warehouse” option is chosen from the “Calculation For” drop-down list box. |
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Help facility available |
The system displays the following in the Header:
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Warehouse Desc. |
The textual description of the warehouse. The system retrieves the description for the corresponding warehouse code from the “Storage Administration” component and displays it. |
Enter the following field in the Header:
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Item Group Code |
A unique code identifying the item group (Alphanumeric, 10). This code must have been defined in the “Item Group Administration” component. |
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Press <Enter> Key |
The system displays the following details in the header
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Item Group Desc. |
The textual description of the item group. The system retrieves the description for the corresponding Item group Code from the “Item Group Administration” component and displays it. |
Enter the following under “Default Entries” header:
In the “For Reorder Qty. Calculation” group box
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Ordering Cost |
The cost associated with raising a Purchase order (Numeric, 28). Mandatory. Ensure that the value entered in this field is greater than zero. |
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Avg. Annual Holding Cost Per Unit Currency. |
The cost incurred on an average per year on the stocks that are held in inventory in the warehouse (Numeric, 28). Mandatory. Ensure that the value entered in this field is greater than zero |
In the “For Safety Stock Calculation” group box:
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Service Level Factor % |
The percentage factor that specifies the level of service provided to the customers in meeting their requirements. (Integer, 2). Mandatory. Ensure that the value entered in this field is greater than zero. |
Enter the following in the “ROQ/ROL/Safety Stock Calculation” multiline:
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Item Code |
A unique code identifying the item (Alphanumeric, 32). Mandatory |
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Help facility available. |
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Variant Code |
Variant code of the item (Alphanumeric, 8). The variant code is mandatory if the item is variant -enabled. |
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Help facility available |
The system displays the following in the “ROQ/ROL/Safety Stock Calculation” multiline:
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Lead Time |
The number of days between the date on which request for stock is made and the date on which stock is received into the warehouse. In other words, lead time indicates the number of days elapsed from the date on which work order or purchase order is raised till the date on which production receipt or goods receipt is generated. |
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Stock UOM |
The unit of measurement of the item stocked in the warehouse Enter the following in the “ROQ/ROL/Safety Stock Calculation” multiline: |
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Annual Consumption Qty. |
The total quantity of stock that is expended or used up from the warehouse annually Mandatory. Ensure that the value entered in this is greater than zero. The system retrieves this value if the consumption quantity for one year (from the current system date to the previous year’s date) is available. Else, you must enter the value in this field. |
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Ordering Cost |
The cost associated with raising a purchase order. Mandatory. Ensure that the value entered in this field is greater than zero. The system displays the value entered in the header by default. |
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Avg. Annual Holding Cost Per Unit Currency |
The cost associated with holding the stocks in inventory . Mandatory. Ensure that the value entered in this field is greater than zero. |
The system displays the following in the “ROQ/ROL/Safety Stock Calculation” multiline:
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Std. Cost |
The standard cost of the item used for valuation purposes. This cost takes into account the material costs, manufacturing overhead and labor charges (Decimal, 28). The system checks the stock maintenance component to see if valuated stock exists for the item in the login OU. If so, then the standard cost value cannot be changed. |
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Annual Holding Cost |
The cost incurred per year on the stocks that are put on hold in the warehouse (Integer, 28). Annual holding cost is the product of average annual holding cost and standard cost. |
Enter the following in the “ROQ/ROL/Safety Stock Calculation” multiline:
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Service Level Factor % |
The percentage factor that specifies the level of service provided to the customers in meeting their requirements. Based on the meta data information for the component, the system retrieves the service level in units (Integer, 2). Mandatory. Ensure that the value entered in this field is greater than zero. The system displays the value entered in the header by default. |
The following are calculated by the system on clicking of the appropriate buttons which can be edited if required
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Reorder Qty. |
The quantity of stock to be replenished when the stock on hand reaches the reorder level in the warehouse (Numeric, 29). |
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Safety Stock |
The quantity of stock stored in the warehouse to meet the lead time variations and consumption rate fluctuations (Numeric, 29). |
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Reorder Level |
The level of stock quantity in the warehouse after which the system automatically initiates stock replenishment action (Numeric, 29). |
The system displays the following in the “ROQ/ROL/Safety Stock Calculation” multiline:
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Item Variant Desc. |
The description of the item variant (Alphanumeric, 150). |
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Item Type |
The type of the item corresponding to the item code. Calculation of ROQ/ROL/Safety Stock is not possible for Service/Kit/Model item types. |
Click the “Calculate Reorder Qty.” pushbutton to calculate the reorder quantity.
The system calculates ROQ as per the formula and displays it in the reorder quantity column in the multiline for the respective item/variants.
The system rounds off the ROQ to the next highest whole number if calculated ROQ results in fractions.
The ROQ is in stock UOM as the annual consumption quantity generated by the system or entered manually is in stock UOM.
Click the “Calculate Safety Stock” pushbutton to calculate the safety stock.
The system calculates the safety stock as per the formula and displays it in the safety stock column in the multiline for the respective item/variants.
The system rounds off the safety stock to the next highest whole number if calculated safety stock results in fractions.
Click the “Calculate Reorder Level” pushbutton to calculate the reorder level.
The system determines the reorder level as per the formula and displays it in the reorder level column in the multilane.
The system rounds off the ROL to the next highest whole number if calculated ROL results in fractions.
Click the “Update Item Master” pushbutton to update and save the reorder quantity, reorder level and safety stock for the item/variant in the warehouse or OU.
The system updates the reorder quantity; reorder level and safety stock values for the item/variant in the “Storage Administration” component if the calculation of ROQ/ROL/Safety stock is made for a warehouse.
The system updates the reorder quantity; reorder level and safety stock values for the item/variant in the “Item Administration” component if the calculation of ROQ/ROL/Safety stock is made for an OU.
The system updates these values only if they are not null in the multiline.
To proceed, carry out the following
Select the “View Item Information” link at the bottom of the page to view details of items.
ROQ/ROL/Safety Stock – An Overview
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This calculation is necessary to plan for replenishment of the stocks as stocks in the warehouse need to be replenished continuously. You can specify whether you wish to determine ROQ, ROL and safety stock for all the warehouses in an OU or a single warehouse. You need to enter the warehouse code only if the calculation is being done for a particular warehouse. You can also specify the item group details, item/variant code, ordering cost, average annual holding cost and annual consumption quantity to calculate reorder quantity.
In addition, you need to specify the service level factor % to estimate the safety stock. Demand during lead-time is calculated as the product of lead-time and average consumption per day. Reorder level is obtained as the sum of demand during time and safety stock.
Calculation of ROQ
Reorder quantity is the quantity of stock to be replenished when the stock level in the warehouse reaches the reorder level. The system retrieves the annual consumption quantity from the “Stock Issue” component. If the data for a year is not available, you must enter the annual consumption quantity manually.
Reorder quantity is calculated using the formula:
Ö (2 x Annual qty x Order cost/Annual holding cost)
Calculation of Safety Stock
Safety stock is the quantity of stock to be stored in the warehouse to meet the fluctuations in consumer demand and variations in lead-time. The system retrieves the monthly consumption quantity from the “Stock Issue” component.
Calculation of ROL
Reorder level is the level of stock after which the system automatically initiates the stock replenishment action Reorder level is calculated using the formula:
Reorder Level = safety stock + demand during lead time
Where forecast demand during lead time = daily requirements * lead time
