Language:


Stock Policy - Average Sales per Day

When the production and purchasing requirements for a particular week or month are calculated, one element in the calculation will be the number of units that should be in stock at the beginning of the next week or month. This figure will be calculated using the information in the Stock Policies setting and the Sales Forecast figures. The Stock Policies setting is where you should specify what the stock level for each Item should be at the end of each week or month and the beginning of the next, expressed as a number of days' sales. You can specify minimum and maximum figures.

In the example illustrated below, we have specified that we want to keep ten days' sales in stock:

If an Item does not have a Stock Policy, it will be assumed that the stock level at end of each week or month should be zero.

When calculating the production and purchasing requirements for a particular week or month, you will be able to choose whether to use the minimum or the maximum stock level, or to ignore the Stock Policy setting. If you choose to ignore the Stock Policy setting, it will be assumed that the stock level at the end of a week or month should be the full Sales Forecast figure for the next week or month.

In the Stock Policies setting, the required stock level for each Item is expressed as a number of days' sales. Calculating the quantity you will sell in one day requires the following information:

  1. The No. of Periods field in the Forecast Settings setting should contain the number of weeks or months that you want to be used in the calculation.

  2. Sales Forecasts for the Item for at least this number of weeks or months ahead of the week or month in question.

  3. If your Period Type is "Months", the No. of Work Days setting should contain the number of sales days in each month. If your Period Type is "Weeks", the Bank Holidays for Sales Forecast setting should contain the number of sales days in each week.
In the example illustrated below, the number of months is six (i.e. the No. of Periods is "6" and the Period Type is "Months"). This means that the estimated sales per day will be calculated using the Sales Forecasts for the next six months:

The estimated sales per day will be calculated using the following formula:

Forecast Month 1 + Forecast Month 2 + ... Forecast Month n
Days in Month 1 + Days in Month 2 + ... Days in Month n
where n is the No. of Periods.

In our example, we need to keep sufficient stock for ten days' sales. Using the Sales Forecast figures that were illustrated in Step 1 on the Production Plan Formula page and the No. of Work Days in the illustration above, the estimated sales per day for Item 40101 at the beginning of March will be calculated as follows:

5100 + 5150 +5170 + 5300 + 5000 + 5100
23 + 18 + 21 + 22+ 21 + 22
Estimated sales per day is therefore 242.68, so ten days' sales will be 2427 to the nearest whole number. 2427 is the quantity that should be in stock at the beginning of March.

A large No. of Periods figure will result in an average sales per day figure that gradually changes if there are seasonal variations in sales. However, if you specify a large No. of Periods figure, you will need to ensure that you have Sales Forecasts for at least that number of weeks or months ahead of your reporting periods, to maintain accuracy in the calculation. For example, if a preview report or Maintenance function covers the period from March to August, the No. of Periods is six and the Period Type is "Monthly", this requires you to enter Sales Forecasts until the next February, six months ahead of August. The No. of Work Days setting should also have entries at least until the next February. If you only have Sales Forecasts until December, the average sales per day figure will not be correct because it will be calculated by dividing four months' Sales Forecast figures by six months' sales days.

---

The Calculation Formula in the MRP module:

Go back to: