This function helps you evaluate and apply optimum purchase quantities for items or item groups when you want to take advantage of a limited discount or anticipate a price increase.
When a discount is one-time or limited, the savings from any additional purchases are eventually offset by the costs of carrying the additional stock. The special buy evaluation considers these savings and costs when determining the optimum purchase quantity for an item or item group.
Similarly, when you contemplate making additional purchases that anticipate a price increase, the special buy evaluation considers the price increase with the carrying costs when determining the optimum purchase quantity for an item or item group.
Special buy calculations
This section describes the calculations that are used for the special buy evaluation.
Additional purchase quantity calculation
The following values are used in the additional purchase quantity calculation:
| Code | Description |
|---|---|
| ACR | Annual Carrying Cost Rate |
| AMD | Average Number of Days in a Month |
| PT | Planning Time (Admin time + Lead time + Trp. time) |
| SBP | Special Buy Percent |
| SOH | Stock on Hand |
| PO | Quantity of Purchase Orders within Lead Time |
| SO | Quantity of Sales Orders within Lead Time |
| POQ | Quantity of Current Purchase Order Suggestion (less any previous quantity added during a Special buy) |
The system calculates the following:
| Code | Description |
|---|---|
| MCR | = Monthly Carrying Cost Rate = ACR/12 |
| OPM | = Optimum Purchase Quantity in Months = SBP/MCR |
| AVQ | = SOH + PO + POQ – SO |
| AVD | = AVQ in Days of Supply, using a daily forecast beginning from today |
| AVM | = AVQ in Months of Supply = AVD/AMD |
| SSM | = Safety Stock in Months of supply, using a daily forecast beginning from today |
| PTM | = Planning time in months = PT/AMD |
| APM | = Additional purchase quantity in Months = OPM – AVM + SSM + PTM |
| ASQ | = Additional stock quantity = Forecast quantity for ASQ, using a daily forecast beginning from today + AVD
ASQ is then rounded to the nearest purchase quantity. If ASQ is rounded up, a test is performed to make sure that the net savings are not at or below zero. If the net savings are below zero after rounding up, ASQ will be rounded down. |
Savings calculation
The following values are used in the savings calculation:
| Code | Description |
|---|---|
| CST | Purchase Suggestion Cost (before any special buy discounts) |
| ASQ | Additional Stock Quantity (previously calculated) |
| SBP | Special Buy Percent |
The system calculates the following:
| SAV = Additional Quantity Savings = CST x ASQ x SBP |
Expense calculation
The following values are used in the expense calculation:
| Code | Description |
|---|---|
| CST | Purchase Suggestion Cost (before any special buy discounts) |
| ASQ | Additional Stock Quantity (previously calculated) |
| AVM | Available Quantity in Months (previously calculated) |
| APM | Additional Purchase Quantity in Months (previously calculated) |
| SSM | Safety Stock in Months (previously calculated) |
| PTM | Planning Time in Months (previously calculated) |
| MCR | Monthly Carrying Cost Rate (previously calculated) |
The system calculates the following:
| MSA = Months of Supply being added = AVM + (.5 x APM) – SSM – PTM |
| EXP = Expense = MSA x MCR x CST x ASQ |
Enquiries
- Purchase suggestion enquiry