Replenishment Method

Definition

Procedure for calculating the raw net demand of a customer location product.

Use

You use a replenishment method to control how the replenishment service determines the raw net demand of a customer location product in a period. The following replenishment methods are available:

Min/Max Replenishment

This method is relevant for the SMI scenario and the Min/Max scenario. Here, the supplier is to keep the projected stock between a minimum stock level and maximum stock level . As long as the projected stock lies above the reorder point – a predefined stock level between the minimum stock level and the maximum stock level – the raw net demand is zero. If the projected stock lies under the reorder point, the replenishment service is to fill up the projected stock up to the target stock (which can also lie under the maximum stock level). The raw net demand of the period is as follows:

Raw net demand = target stock – projected stock

The reorder point and target stock are location product parameters that you can determine directly or define depending on the minimum stock level and maximum stock level.

Net-Demand-Based Replenishment

This method is relevant for baseline demands in the Responsive Replenishment scenario. Here, the safety stock is simultaneously the minimum stock level, reorder point, and target stock. If the projected stock is greater than the safety stock, the raw net demand is zero. If the raw net demand is less than the safety stock, the raw net demand is as follows:

Raw net demand = safety stock – projected stock

This graphic is explained in the accompanying text.

This formula is not relevant for promotion demands.

Product interchangeability can reduce the raw net demand. For more information, see Calculation of Raw Net Demand .

Stock Parameters for Min/Max Replenishment

You have the following options for defining the reorder point and target stock:

Enter reorder point and target stock directly in location product master

In the production location master, you enter the reorder point in the Reorder Point field, and the target stock in the Maximum Stock Level .

Define reorder point and target stock based on minimum stock level and maximum stock level

You can define the reorder point and the target stock based on minimum stock level, as well as the stock interval defined through the minimum and maximum stock level: The reorder point or the target stock is the sum of the minimum stock level and a particular percentage of the stock interval. The percentage used to calculate the reorder point is called "replenishment threshold", the percentage used to calculate the target stock is called "target threshold". The following formulas explain how the system calculates the reorder point and the target stock:

Reorder point = minimum stock level + replenishment threshold x (maximum stock level – minimum stock level)/100

Target stock = minimum stock level + target threshold x (maximum stock level – minimum stock level)/100

In the standard system, the replenishment threshold is 0 percent, and the target threshold is 100 percent (reorder point = minimum stock level, target stock = maximum stock level). These are the parameters for an SMI scenario. In the replenishment service profile, you can enter other replenishment thresholds or target thresholds.

This graphic is explained in the accompanying text.

If the replenishment service is to use the above formula for the reorder point, you are not allowed to enter a reorder point in the location product master.

You have different options for defining the minimum stock level. For more information, see Determination of Minimum and Maximum Stock Level .

Stock Parameters for Net-Demand-Based Replenishment

In net-demand-based replenishment, the reorder point and target stock are identical, and are equal to the safety stock (also called minimum stock level). To determine the safety stock (minimum stock level), you have different options (for example, different safety stock methods). For more information, see Determination of Minimum and Maximum Stock Level .