Oracle Warehouse Management System Min-Max Replenishment

An Oracle White Paper June 2002

Oracle Warehouse Management System Min-Max Replenishment

INTRODUCTION

The purpose of this white paper is to provide a more detailed description of the working of Inventorys Min-Max Planning report than is done in the Inventory User Guide. It is assumed that the reader is already familiar with the material covered in the User Guides section on Min-Max Planning. We start with the profile options used by the report, then describe how reorder quantity gets calculated and finally discuss the restocking process where min-max generates Purchase Orders, Requisitions, WIP Jobs and Move Orders for replenishment. Profiles used by Min-Max Planning Note: These profiles are updateable at all levels (user, responsibility, application or site). INV_MINMAX_REORDER_APPROVED (INV: Minmax Reorder Approval) This profile determines whether restock orders generated by min-max are created with status already set to approved, or require additional processing for approval. It affects Purchase Orders, Requisitions and WIP work orders (but not Inventory move orders). It has two values: Incomplete and Approved. Inventory predefines a value of Approved for this profile for all levels upon installation. If you choose Incomplete, you can load requisitions as unapproved and use the document approval functionality in Oracle Purchasing. For WIP, setting the profile to Approved ensures that the job or schedule is in a status of Released upon creation (a profile value of Incomplete will set the job status to Unreleased). INV_PURCHASING_BY_REVISION (INV:Purchasing By Revision) If this profile is set to Yes, the report will choose the highest valid revision of a revisioncontrolled item and specify this revision for the purchase orders or requisitions that are created for restocking. INV_ROUND_REORDER_QTY (INV: Round Reorder Qty) Only used if a fixed lot multiple is specified for a min-max planned item. Defining a fixed lot multiple ensures that the reorder quantity is adjusted upwards or downwards to make it an even multiple of that value. If the profile is set to Yes the reorder quantity is rounded up and if it is set to No the reorder quantity is rounded down. Please see the section on reorder quantity calculations for more information.

Reorder Quantity Calculation

Reorder Quantity?
YES Total Available < Minimum for Item NO Total Available >= Minimum for Item

How much to Reorder???

Reorder Quantity = Maximum Stockable Quantity - Total Available Fixed Lot Multiple Defined?

YES Take the INV_ROUND_REORDER_ QTY profile values in consideration.

NO If Minimum and Maximum Order Quantities specified then consider them for reorder quantity calculation

Arrive at a final reorder quantity and reorder using the correct source type

After arriving at an initial estimate for the reorder quantity (Maximum quantity Total available, where total available = on hand + supply - demand), it goes through the following additional checks in the order in which they are listed: If a fixed lot multiple is defined, round the reorder up or down based on profile INV_ROUND_REORDER_QTY. For e.g. if the reorder quantity was initially estimated to be 24, and the fixed lot multiple was set to 10, the

reorder quantity would be rounded up to 30 if the profile was set to Yes, or rounded down to 20 if the profile was set to No. If a maximum order qty is not specified or if the reorder quantity is less than maximum order quantity, no further changes are required (the next check is skipped) If a maximum order quantity is specified and reorder quantity exceeds maximum order quantity, we need to make sure we cap each restocking order at the specified maximum, and also ensure that any remaining quantity will satisfy the minimum order quantity requirement. The following example will clarify this further:

Say, reorder quantity = 34 maximum order qty = 10 minimum order qty = 5

We first create 3 orders for 10 each, which is 30. The left over quantity is 4. Since the minimum order quantity is 5 we should discard the remaining quantity. So the reorder quantity that is finally displayed on the report output will be 30. On the other hand if the remaining qty was say 8, then the last move order/requisition/work order would be for qty 8, and reorder quantity after all adjustments would still be 38, and so on. Note: This last check (namely checking to see if the balance met or exceed the minimum order quantity requirement) was introduced in patchset H and does not exist in previous releases, so in this example, the reorder quantity would be 3 * 10 + 4 = 34 Needless to say if no minimum order qty is specified (or if it is 0) then this downward adjustment is not performed. The following table has examples of how reorder quantity gets calculated:

Total Available
5 5 5 5

Minimum Quantity
10 10 10 10

Maximum Quantity
50 50 50 50

Estimated Reorder Quantity

45 45 45 45

Fixed Lot Modifier

9 10 10

Reorder Quantity Profile

YES NO YES NO YES NO

Adjusted Reorder Quantity

45 45 50 40 50 40 45 45 45 45 45 45

Minimum Order Quantity

Maximum Order Quantity

Notes
1 order of 45 1 order of 45 1 order of 45 1 order of 50 1 order of 40 2 orders of 25 1 order of 25 and 1 order of 15 1 order of 45 1 order of 45 2 orders of 18 each and 1 order of 9 2 orders of 18 each and 1 order of 9 1 order of 36 1 order of 36 1 order of 45 1 order of 45 1 order of 40 1 order of 30 1 order of 30 1 order of 30 1 order of 10 1 order of 10 1 order of 10 1 order of 50 1 order of 63 1 order of 63 1 order of 60 1 order of 50 and 1 order of 10 1 order of 49 and 1 order of 14 1 order of 49 and 1 order of 7 1 order of 50 1 order of 40 9 orders of 10.05 and 1 order of 7.74 8 orders of 10.05 and 1 order of 7.24

Final Reorder Quantity

45 45 45 50 40 50 40 45 45 45 45 36 36 45 45 40 30 30 30 10 10 10 50 63 63 60 60 63 49 50 40 98.19 87.28

15 15 18 18 9 9 18 18 35 15 35 30 30 30 10 10 10 5 21 21

25 25

5 5

10 10

50 50

45 45

9 9

YES NO YES NO

18 18 36 36

5 5 5 5 5 5 0 0 0 -10 -10 -10 -10

10 10 10 10 10 10 10 10 -10 -5 -5 -5 -5

50 50 50 50 20 20 10 10 50 50 50 50 50

45 45 45 45 15 15 10 10 50 60 60 60 60

YES NO

40 60

15

YES NO YES NO

15 15 10 10 63 56

50

YES NO

50 7 YES NO 63 56 60 40 98.19 87.28 25 25 5.03 5.03 49 49 50 50 10.05 10.05

25 4.75

30 5.5

70 93.81

45 89.06

20 10.91

YES NO YES NO

Change in Supply calculations The only change is a bug

fix

to

ensure

that

records

in

po_requisitions_interface_all that are in an ERROR status are

not considered as supply. Min-max inserts records into the PO interface table for creating Purchase orders/requisitions for replenishment, and a subsequent min-max run will detect these records and consider them as supply (provided the report parameter Include Interface Supply is set to Yes). However if the requisition import program on the PO side fails to process these records successfully, the status changes to ERROR and they need to be purged. Change in Demand calculations A bug fix to the min-max report resulted in the removal of MTL_DEMAND_OM_VIEW for sales order demand (please see bug 1636139). This causes problems for customers trying to plan based on orders maintained on an external order management system. An enhancement request has been logged to restore this functionality (2368275) and documentation will be updated to reflect this change. Known issue with on hand quantity for lot-controlled item Min-max uses the quantity tree API to determine on hand quantity. Because of a limitation in the way this API currently works, for lot-controlled items the value returned includes all inventory including lots that have expired. A future release will correct this issue.

Restocking Once the reorder quantity has been determined and if restocking has been turned on (report parameter Restock must be set to Yes), min-max creates replenishment orders (Purchase Orders, Requisitions, WIP Jobs and Move Orders) to bring inventories up to the desired levels. Note: If the item is set up as a repetitive planned item (Repetitive Planning flag checked on MPS/MRP Planning tab of Organization Item form INVIDITM), then the report parameter For Repetitive Item must be set to something other than Do Not Restock. The LOV for this parameter only shows up if the Restock is set to Yes.

Determining Order Type and Order Source The source type specified and whether the item is set up as a Make item or a Buy item determines the type of replenishment order created. For organization level min-max planning, the source type is specified on the General Planning tab of Organization Item form (if this not filled in, the report uses the source type defined on the Organization Parameters form INVSDOIO see the Item-Sourcing Detail section of the ATP, Pick, Item-Sourcing tab). For subinventory level min-max planning, the source type is specified on the Sourcing tab of the Item Subinventories form INVSDSUB. If this is left blank, the report checks to see if a source type is specified either at the Subinventory level, the Organization Item level, or on the Organization Parameters form.

If the item is a Buy item and the source type is set to Inventory min-max creates requisitions, if the source type is Supplier it creates purchase orders and if the source type is Subinventory it creates move orders. Note that source type Subinventory is not valid for organization level planning (it is not a valid option on the Organization Parameters form; if used on the Organization Item form for an item that is planned at the organization level it will not restock the item). Items must also be transactable in order for min-max to create purchase orders, requisitions or move orders (Transactable flag on Inventory tab of Organization Item form checked). For Make items min-max inserts a record into the WIP interface table

wip_job_schedule_interface for creating a WIP Job or Schedule for

manufacturing this item. WIP work orders cannot be generated for subinventory level min-max planning if a Make item is min-max planned at the subinventory level, the report flips the flag and treats it as a Buy item instead. Also, the item must have the Build in WIP flag checked (Work In Process tab of Organization Item form), and Pick Components must be unchecked (Order Management tab).

Additional considerations for Purchase Orders and Requisitions The following conditions must be satisfied before min-max can insert records into the PO interface table: For requisitions (source type Inventory), internal orders are enabled for the item (Internal Orders Enabled flag on Order Management tab of the Organization Item form is checked) For purchase orders (source type Supplier), the item is purchasable (Purchasable flag on Purchasing tab is checked) An Inventory AP Accrual account is defined for the organization (see Receiving Accounts section of the Other Accounts tab on Organization Parameters form) An Invoice Price Variance account is defined for the organization (same as above) An Encumbrance account is defined. For subinventory level planning, this can be specified at the item-subinventory, subinventory, organization-item or organization level (org parameter form). For organization level planning, min-max will only look at the organization-item or organization level to find the encumbrance account A charge account is defined. If the Inventory Asset Value flag on the Costing tab of Organization Item form is checked, then the material account is used (for organization level planning, the material account is specified in the Valuation Accounts section of the Costing Information tab of the Organization Parameters form; for subinventory level planning, the material account is specified at the subinventory level). If the Inventory Asset Value flag is not checked, the expense account is used (for org level planning, the expense account is defined on the Purchasing tab of the Organization Item form, or in the Valuation Accounts section of the Costing Information tab of the Organization Parameters form; for sub level planning it checks the expense account defined at the subinventory level before looking at the orgitem or org level expense account)

Min-Max and WMS This document has been specifically written keeping Oracle Inventory in mind. Still most of the contents and principles do apply for Oracle WMS. In a WMS enabled organization min-max would consider quantities packed in LPN in on-hand quantities calculation. From patch set H move orders created by Min-Max planning will be dispatched as tasks. Other than this Min-Max would function same for both Inventory and WMS organizations. Debugging tips With patchset H much of the code has been moved to the database tier. This change has made it possible to introduce better trace messages that help in debugging. To use this feature, set the profile INV: Debug Trace to Yes. - PL/SQL trace messages are then written to the concurrent request log file. Another profile INV:Debug Level controls the level of detail. Min-max writes messages at three levels - 1,5 or 9 - with 9 being the most detailed. A common problem that users (especially novice users) run into is when the report completes without any output. In such cases changing the Item Selection report parameter to All min-max planned items will force the report to display the item regardless of available quantity, and allows you to investigate the issue further.

Oracle Warehouse Management System Licence Plate Numbesrs August 2001 Author: Aditya Bhelande, Saju David Copyright Oracle Corporation 2001 All Rights Reserved Printed in the U.S.A. This document is provided for informational purposes only and the information herein is subject to change without notice. Please report any errors herein to Oracle Corporation. Oracle Corporation does not provide any warranties covering and specifically disclaims any liability in connection with this document. Oracle is a registered trademark.

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