PDF 8

Facilitated Learning Guide
Replenishment
Class #7504
Table of Contents
Overview and Objectives............................................................................................................. 4
1.0 Key Concepts and Terms ....................................................................................................... 5
2.0 Replenishment Inputs............................................................................................................. 8
2.1 Requirements Calculation.................................................................................................... 10
2.2 Knowledge Check................................................................................................................ 32
3.0 Requirements Optimization Process Overview ................................................................... 33
3.1 Knowledge Check................................................................................................................ 45
4.0 Order Proposal Release Management.................................................................................. 46
4.1 Knowledge Check................................................................................................................ 50
5.0 Replenishment for Distribution Centers (DCs).................................................................... 51
5.1 Knowledge Check................................................................................................................ 53
6.0 Review ................................................................................................................................. 54
7.0 Next Steps ............................................................................................................................ 56
Solutions Key............................................................................................................................. 57
Appendix.................................................................................................................................... 59
Learning Evaluation................................................................................................................... 61
Page 2 of 61 Replenishment Version 1

About this Facilitated Learning Guide
This guide is yours to keep. Please write whatever notes you require, answer questions and
complete activities directly in the guide. At times you will be provided direction to complete
an exercise in the training environment. Your Business Coach will assist you in how to log
onto the system to complete these activities.
Throughout the guide you will see icons to cue you to take particular action or describe the
content. These icons include:
Icon Meaning/Action
Read the objectives for the course or module.
Keep in mind the suggested time allowed for this module.
Complete the exercise in the training environment.
Complete the activity in the guide.
Represents a concept or idea.
This is a key concept to the module.
The course will provide an approximate time to complete each activity. Depending upon your
background and level of expertise, you may already be familiar with some tasks discussed. In
those cases, you will likely complete the activities in less time than suggested. Regardless of
your experience and expertise level, you will want to complete all of the modules to ensure you
are familiar with the processes, tools and resources that are unique to our company and THD
Tools.
To complete this facilitated guide, work with your Business Coach to schedule time to
complete each module/course and conduct follow up with your Coach to review your progress
and answer your questions. It is important to schedule training and follow up to ensure you are
able to complete daily job related tasks and still execute the learning you require to be
successful.

Overview and Objectives
The Replenishment course provides details on the replenishment process within F&R. Upon
completion of this course, the Inventory Analyst will be able to:
• Define the replenishment calculation

• Define and describe the requirement quantity optimization calculation
• Explain the basics of order proposal management
• Define and list the steps in the import and lumber DC management process
Course Length: 2 Hours, 45 Minutes
Pre-Requisites Courses: Nuts & Bolts of THD Tools

F&R Overview – Central
Forecasting
Supporting Documentation: A list of supporting documents and system access instructions

are located in the appendix to this guide.
Getting Started
The first step to learning about replenishment is building a common language. The following
module provides a list of key concepts and terms.
Please Note:
The THD Tools system uses the terms article and site to describe a specific item and store or
DC. The F&R system uses the terms product and location in place of article and site. The
terms article site and location product are interchangeable but are used in conjunction with the
system discussed.

1.0 Key Concepts and Terms
Suggested Time: 5 Minutes
Below is a list of key concepts and terms that appear frequently throughout this course. Take a
few minutes to become familiar with these terms.
Replenishment A Method of replenishing stock at stores. The Home Depot offers

an automatic replenishment process for their vendors.
Procurement Cycle The Procurement Cycle determines order and delivery days for a
product pertaining to a specific source and target location
combination.
For example, the procurement cycle for a Ryobi Drill indicates

new shipments are delivered on Monday weekly.
Requirements Determine the future requirements expected for a location/product

Calculation using the location/product master data, requirements calculation
profile, forecast safety stock, and orders on hand & on order.
Order Proposal A request from The Home Depot for a specific article from a
vendor. Order proposals are created in F&R and transferred
nightly to THD Tools.
For example, The Home Depot store 9001 is low on energy

efficient light bulbs. The F&R system sends an order proposal for
Vision 14Watt Soft Light CFL, 4 Pack light bulbs to THD Tools.
Optimization This process optimizes the location product net requirements by

applying predefined restrictions/conditions, such as case pack
quantities (i.e. multiples in which an order must be placed) and
vendor minimums, to the order proposal quantity. The final output
of optimization is the order proposal.
For example, during the F&R run for Vision 14Watt Soft Light
CFL, 4 Pack light bulbs optimization takes place to round up the
quantity being ordered to meet vendor minimum. The Home
Depot store only needs 100, but the vendor, Vision, requires The
Home Depot to order 250 at a time.

Service Level Parameters used to determine safety stock levels. Service level
defines an in-stock percentage target.
For example, a 95% service level sets a systematic goal to be in-

stock 95% of the time, which translates to out-of-stocks 5% of the
time.
Safety Stock Additional stock kept on hand to meet customer needs in the event
of a higher demand for a product.
For example, during the fall The Home Depot has safety stock of
Garden Brand rakes available in order to meet increased demand.
Location Product An item sold by The Home Depot and the store in which the item
is located on a continual basis.
For example, the Mississauga Store is the location and the product
is a Ryobi drill for a location product.
FRP Run F&R Processor Run is the batch job for the F&R system. The
primary outputs of the FRP run are order proposals and exceptions
For example, the FRP run took place and created vendor minimum
exceptions that need to be resolved by the Inventory Analysts prior
to 6pm.
THD Tools THD Tools is a software package solution for The Home Depot
provided by SAP, an industry leader in Enterprise Resource
Planning (ERP) software applications. This software integrates all
functional areas of The Home Depot into one transactional system
connecting the business as a whole to provide efficient and
effective communication through shared information.

2.0 Replenishment Inputs
In the F&R Overview – Central course, the replenishment process was reviewed at a high
level. This course goes through the Replenishment process at The Home Depot in more detail,
which is visually shown below in the chevrons.
Replenishment
Calculate Calculate Optimize Manage

Safety Requirements Requirements Order Proposal
Stock Quantities Release
The following is an overall F&R process flow, and this course will be focusing in on the
Calculate Replenishment step within the overall flow.
Continuous
Improvements
Calculate Calculate Manage Release

Import
Forecast Replenishment Exceptions Order
Data
Proposals
F&R (Forecasting & Replenishment) provides automated replenishment capabilities. The

system uses a statistical forecast or a manual target stock and reorder point as the basis for
requirements calculation and order quantity optimization. This process takes place nightly
during the batch run of the FRP (Forecasting and Replenishment Processor) according to a pre-
defined schedule.
The primary outputs of the FRP run are order proposals and exceptions. Order proposals
contain system-generated order quantities created to meet business-defined service levels in
stores and distribution centers (DCs). Much like purchase requisitions, they are a preliminary
step to a purchase order (PO) and allow the Inventory Analyst time for review before an
official PO is generated. Exceptions are system-generated alerts that notify the Inventory
Analyst of actionable issues associated with master data, inventory, the forecast or
replenishment. As the Inventory Analysts will see later in this course and in more detail in the
Central Ordering course, exceptions structure much of the Inventory Analyst’s workload, as
they point him/her toward higher priority issues to facilitate resolution. Order proposals and
exceptions are available to be worked during the day, and order proposals are transmitted to
THD Tools in the evening to create POs.
Not all The Home Depot Canada location products are automatically replenished. The
business may decide to order certain location products using allocations functionality provided
in THD Tools, which an Inventory Analyst will see in more detail in the Allocations course.
For this course, the replenishment process is divided into three high level steps: requirements
calculation, requirements optimization and order proposal management.
Notes

2.1 Requirements Calculation
Replenishment

Safety Stock Requirements Requirements Order Proposal
Quantities Release
The requirements calculation is the first step taken by the system to create an order proposal.
There are five inputs to the requirements calculation, as depicted in the picture below:
Requirements On Hand
Master Data Calculation Forecast Safety Stock and
+ Profile
+ + + On Order
Master Data
+ Profile
+ + + On Order
The following items fall under the topic of master data:

• Replenishment type (RP type)
• Product sourcing
• Scheduling
• Additional location product master data
Replenishment Type (RP Type)
Replenishment Type (RP Type) is a parameter that is found within in the Logistics Store and
Logistics DC tabs in the Article Master (MM42) in THD Tools. RP Types determine which
location products are transmitted from THD Tools to F&R as relevant for F&R replenishment.

For F&R-relevant location products, the RP Types identify how a location product is
replenished. Once an article has an F&R-relevant RP Type, it is transferred to F&R in the
interface from THD Tools. The RP Type is then visible in F&R in location product master
data. Below is a screen from the Location Product screen in F&R that displays the RP Types
available in the system.
Replenishment Type and Description (FRE/MASS_MATLOC)
Several RP Types are relevant for F&R, and each denotes a variation in the requirements
calculation. RP types that may be used in The Home Depot Canada are defined, as follows:
RP Type Description
00 Location products assigned this RP Type are neither forecasted nor replenished.
Their master data and transactional data, such as consumption history, is
updated in F&R through the interface with THD Tools and the Point of Sale
(POS) Pipe, which is the means by which data is transmitted from all registers
to other systems, such as F&R. This RP Type is used for replacement articles
and clearance/exit articles. In other words, location products with a 00 RP type
are either being replaced by a newer model or not going to be sold at The Home
Depot anymore. This is covered in more detail in the Article Lifecycle
Management training course.
09 Location products assigned this RP Type are replenished based on a manually
set reorder point* / target stock* only. A forecast is generated but is not used in
the requirements calculation. Slow sellers form the majority of location
products with this RP Type.
RP Type Description
10 A manual target stock* is set for location products with this RP type. The
system continues to calculate an automatic reorder point based on the forecast.
11 Location products with this RP type use a dynamically calculated target stock*
and dynamic reorder point* based on the forecast in their requirements
calculation.
12 Location products that need a forecast to be generated (possibly to support
ordering through allocation) but are not automatically replenished use this RP
type.
* Note: These items and RP Types are explained in more detail later in this course.
The Home Depot Canada has decided to use RP type 11 as much as possible, since this is the
only RP type that fully leverages the dynamic safety stock and predictor capabilities of F&R.
The use of predictor capabilities (i.e. a statistical forecast), however, is only relevant when
enough sales are generated by a location product. For example, if a product sells less than 10
units on average in a year at the store level, it is very difficult to predict sales with an
acceptable degree of accuracy. The forecast becomes a bit excessive. Its use in a dynamic
target stock and reorder point calculation is a waste of valuable system processing capacity. In
that case, the business may choose to use other RP types, such as 09, where the forecast is not
taken into consideration in the requirements calculation. The assignment of RP Types
continues to be refined.
Notes:

Product Sourcing
Identifying product sourcing, which is the way that products are obtained to be sold in the
stores, is a critical element of the requirements calculation. The following master data
elements clarify the relationships between vendors, DCs, stores and products.
Master Data Element Description Example

Location Product Forecasting and replenishment in The order proposal (OP)
F&R are performed at the location quantity for the DeWALT
product level to incorporate specific Compact Drill Kit assigned to
demand patterns at each store or the Park Royal store in
distribution center (DC). Vancouver has been
generated using data specific
to that location product.
Transportation Lane A transportation lane for subranges DeWALT in D25 (the
for Subrange defines the relationship between the Hardware department)
vendor subrange and a location, supplies products to the Park
either a store or a DC. Certain Royal store.
parameters, such as the procurement
cycle, are assigned at this level.
Transportation Lane A transportation lane for products DeWALT in D25 (the
for Product defines the relationship between the Hardware department)
vendor subrange, the product and a supplies a Compact Drill Kit
location, either a store or a DC. to the Park Royal store.
Certain parameters, such as a
release profile, may be assigned at
this level.
Scheduling
The next replenishment input is scheduling. Scheduling has four major inputs, which are the
following:
• Calendars
• Lead time
• Procurement cycle
• Transportation lane for subrange
• Calendars - Calendars define holidays and working days for locations. The
procurement cycle uses calendars to determine order days and delivery days.
Calendars may be assigned at the location and/or the location product level.
Below is a screen from the planning calendar in the F&R system:
Planning Calendar (n/FRE/SAPAPO/CALENDAR)
• Lead Time (also known as Planned Delivery Time) - The lead time is the time
elapsed between PO transmission and goods receipt at the store or DC. The lead
time may be created at the location product level.
Notes:

• Procurement Cycle - The procurement cycle is a set ordering schedule used, in
conjunction with calendar(s), to calculate order days and delivery days for order
proposals. Based on the designated order day, the Inventory Analyst can define
exceptions to the lead time. For example, some The Home Depot Canada
distribution centers (DCs) have a different lead time to the store when the store
orders on Monday vs. Thursday. Below is the Procurement Cycle Maintenance
screen:
Procurement Cycle Maintenance (n/FRE/SCHEDULE)
Procurement
cycle information
For the procurement cycle

shown here, the system will
order weekly on Monday.
In addition, the Inventory Analyst defines how product can be ordered and delivered when a
normal order or delivery day falls on a calendar-defined holiday.

Delivery and Order Day Exception (n/FRE/SCHEDULE)
Based on the lead time and calendar, the order day or delivery day may fall on a day not valid
for ordering or receipt at the store. As shown below, the procurement cycle instructs the
Inventory Analyst what to do if this happens. In this example, delivery day exceptions for the
source and target locations are to be ignored, so no changes are made to those dates even if
they violate delivery day rules. The same is true of the order day for the source location.
However, if the order day for the target location violates the order day rules, the system is
instructed to order the previous day.
Procurement Cycle Maintenance (n/FRE/SCHEDULE)
The procurement cycle can be assigned at the transportation lane for product or subranges
levels. At The Home Depot Canada, it will always be assigned at the transportation lane for
subranges level.
Transportation lane for subrange - As reviewed in the F&R Overview training course, the
vendor relevant for ordering is the vendor subrange. The transportation lane for subrange
defines the stores and/or DCs supplied by a vendor subrange. The procurement cycle is
assigned at this level. One the next page is a screenshot of the Transportation Lanes for Sub
Ranges.

Transportation Lanes for Sub Range (n/FRE/MASS_TRPROD2)
For the example above, the procurement cycle assigned occurs weekly on Monday. The screen
shows the target and source locations, as well as the RP types for the source location subrange.
These four pieces of information are used to create the timeline upon which the requirements
calculation is based or the scheduling calculation.
Scheduling Calculation
In this course, one example will flow throughout the course to illustrate the requirements
calculation. The basis for the requirements calculation is the schedule, and the following
example demonstrates how the four elements of scheduling come together to form the basic
timeline used in the replenishment calculation. Some new and critical terms in which dates |
are discussed are introduced.
Consider this example: The Home Depot store #7001

receives a weekly replenishment of Behr Paint. The paint
comes directly from Behr, who is the vendor. Therefore the
relationship of Behr to store #7001 is defined as part of the
transportation lane for the Behr vendor subrange. In the
graph below, the procurement cycle is Monday weekly. The
order is placed every Monday, and the delivery date
for the order is Monday, based on a seven day lead time.
Below is an illustration of the Behr Paint Order Day Procurement Cycle:
Behr Paint Order Day Procurement Cycle
Order 1st Availability Date/

Day 7 Day Lead Time Delivery Date
Stock Period Demand Period 1 (DP1) Demand Period 2 (DP2)
• Order Day: The day the FRP run attempts to create an order proposal for a location
product.
• Availability Date: Order Day + Lead Time – The date on which product is available
for sale at the store if ordered today.
• Stock Period: The period between the order day and the first availability date. This is
the period for which F&R can do nothing to impact inventory levels.
• Demand Period: The period between the first and second availability dates. This is the
period on which the system focuses in the requirements calculation. The system orders
primarily to meet the demand of this period. During requirements optimization, the
system may attempt to order to meet demand in the second, third or additional demand
periods in order to meet a vendor restriction. This is discussed in more detail during the
Requirements Optimization portion of this training course.
Notes:

The following screenshot shows the additional location product master data that is used within
the requirements calculation:
Additional Location Product Master Data (/n/FRE/MASS_MATLOC)
Some other master data elements held at the location product level are used during the
requirements calculation, as follows:
Parameter Description
Maximum Stock Quantity Maximum stock quantity defines the maximum amount of
inventory that should be held at a location product level. Based
on settings in the Requirements Calculation profile, to be
discussed in more detail later in this course, exceeding this
maximum causes an exception to be generated and may also cap
the amount of inventory that may be ordered.
Minimum Stock Quantity Minimum Stock Quantity is the static minimum stock that may
be set by the Inventory Analyst. It functions as a presentation
minimum and, if used in the requirements calculation, represents
the target value of the inventory at the end of a demand period.
It is a required field when using RP types 09 and 10. It is an
optional field for RP type 11, and its use is further controlled by
settings in the Requirements Calculation profile, to be discussed
in more detail later in this course.

Parameter Description
Maximum Target Range Maximum target range determines the maximum number of days
for which the product is procured. For example, if the maximum
target range is 10 days, then product must be purchased in
quantities no larger than what is needed for a 10-day supply.
Minimum Target Range Minimum Target Range determines the minimum number of
days for which the ordered amount of a location product must be
sufficient without the stock of the location product falling below
the minimum stock level. For example, if the minimum target
range is 5 days, then product must be purchased in quantities
large enough to handle 5 days worth of demand.
Manual Target Stock The manual target stock is the targeted on hand (OH) value at
the beginning of the first demand period if no static minimum
stock is present. If a static minimum stock is present, the
targeted OH at the beginning of the first demand period is the
target stock plus the static minimum stock. Only used for RP
types 09 and 10.
Manual Reorder Point A requirements calculation is triggered if the projected OH at the
beginning of the first demand period does not exceed the reorder
point (or target stock, if no reorder point is maintained). Only
used for RP type 09.
Now that all of the master data components have been discussed, the next step in the course is
to review the Requirements Calculation Profiles, which is the next input for the Requirements
Calculation.
Notes:

+ Profile
+ + + On Order
Requirements Calculation Profile
The next input to the requirements calculation is the requirements calculation profile. Below is
the requirements calculation profile within the F&R system:
Requirements Calculation Profile
Sub-Profile Parameter definitions

Basic Settings -Ignore Negative Stock Within Requirement Calculation: If this
parameter is flagged, projected stock with negative value is
considered to be zero. Otherwise, negative stock information
remains unchanged.
-Lower Threshold for Net Requirement Consideration: This
threshold defines the lower limit of a net requirement for a location
product. If the net requirement is less than the threshold, the location
product is not ordered for the next demand period.

Dynamic Minimum -Use Dynamic Minimum Stock: This flag defines whether the
Stock calculated dynamic minimum stock can be considered. The
calculated dynamic minimum stock is only taken into account if the
flag is checked and if the manually defined static minimum stock is
less than the calculated dynamic minimum stock.
-Considered Period: Specifies the period(s) to consider in the
calculation of the dynamic minimum stock within the weekly
consumption horizon. The following options can be selected: All
periods considered, Periods with DIF Boolean Predictors Ignored,
Periods with DIF Calendar Effects Ignored, and Periods with any
DIFs Ignored.
-Weight of Mean Value: Mean value calculated based on the
corrected consumption of the past weekly consumption horizon and
is part of the minimum stock calculation. The appropriate settings
are maintained in the forecast profile. The definition of the weight
for mean value can be independent or dependent of selling class. If
no specific selling class is defined, the default value is used.
-Weight of Deviation: Deviation calculated based on the corrected
consumption of the past weekly consumption horizon and is part of
the minimum stock calculation. The appropriate settings are
maintained in the forecast profile. The definition of the deviation can
be independent or dependent of selling class. If no specific selling
class is defined, the default value is used.
Daily Demand -Weighting of Consumption: Indicates the manual weighting
factors for the individual days of the week, specifying how the
consumption is distributed across the week. The manual weighting
factors are only considered if dynamic calculation is not selected.
-Use Dynamic Dayweights: If this parameter is flagged the dynamic
calculation of dayweights is active. The system considers the periods
of the weekly consumption horizon in the determination of the
weighting factors.
-Level for Dayweight: Specify the desired level of dynamic
dayweight calculation by selecting the location product or location
level and based on the selling class. If the location product level is
defined but no dayweight is available yet for a location product, the
system uses the location level.
-Smoothing Factor Dayweights: Defines the adaptiveness of past
consumption periods.
-Distribution of PubHolid. Forecast Value: This parameter defines
whether the system distributes forecast values when a public holiday
in involved for the location in question. The calculated weekly mean
forecast is distributed to the workdays of the week. If one of the
workdays is a public holiday when the location is closed, the daily
forecast value can be uniformly distributed to other days. The
Inventory Analyst can define the workdays before and after the
public holiday. If the distribution is selected and no number of days
before and after the public holiday is recorded, the system distributes
the forecast value to all remaining workdays of the week in which the
public holiday occurs.
-Days Before Pub Hol to Distr Forecast: This parameter defines
the number of days before the public holidays considered by the
distribution.
-Days After Pub Hol to Distr Forecast: This parameter defines the
number of days after the public holidays considered by the
distribution.
Limit Types -Limit Type for Maximum Stock: Defines the limitation given by
the maximum stock:
-Limit type = 0: The maximum stock is a soft limit. It can be

exceeded for the first demand period in order to
fulfill the demand requirements. In this case, the
system issues exception 224 (maximum stock will
be exceeded for a certain location-product). The
maximum stock cannot be exceeded by adding
further demand periods
-Limit type = 1: The maximum stock is a hard limit. It cannot
be exceeded at all, not even for the first demand
period.
The next inputs in the requirements calculation are the forecast and safety stock.
+ Profile
+ + + On Order
Forecast
A statistical forecast is generated weekly on Sunday night at the location product level.
Previously the Forecasting course covered the details on the forecast calculation and its inputs.
The mean forecast, which includes DIFs, is used in the replenishment process as the basis of
the requirements calculation. During the requirements calculation, the system considers the
predicted demand in the first demand period and orders to meet that demand.

Safety Stock
Because the forecast is never 100% accurate, the system must add
additional stock, known as safety stock, to the forecasted demand to
minimize stockouts. The business can set service levels, defined
below, to indicate just how much safety stock is needed.
Service Levels
Service level defines an in-stock percentage target. For example, a 95% service level sets a
systematic goal to be in-stock 95% of the time, which translates to out-of-stocks 5% of the
time. Ideally, The Home Depot would be in-stock every day in every product at every
location. Because the system cannot predict every customer purchase that goal is impossible.
An unreasonable amount of inventory would have to be purchased to ensure a service level
approaching 100%. For every percentage point in the service level above 95%, the amount of
inventory required increases exponentially, as illustrated below in the classic Service Level
Graph.
Service Level Graph
Inventory Level
80 90 95 99
Service Level
For this reason, the business expects and plans for a certain amount of out-of-stocks through
the use of service levels. F&R allows the business to use service level as a tool to balance in-
stock percent (and the resulting lost sales) and inventory levels. The Home Depot wants to
minimize inventory levels without having a negative effect on our in-stock metric. The
business defines the service levels that they feel are appropriate for each article depending on
margin, sales velocity, project completion need, etc.

The service level is defined by a combination of selling class, ABC classification and forecast
accuracy:
• Selling class - Selling classes are defined by sales unit velocity. The boundaries of
each of the six selling classes are defined by the business. Articles are dynamically
assigned to a selling class each week. As discussed in the Forecasting course, selling
class is primarily a driver of the forecasting method, but it is also used as a means of
assigning service levels, as the Inventory Analyst sees below in the Service Level
Profile.
ABC Indicator Selling Classes
Default value USS1 USS2 SS1 SS2 FS1 FS2
Default value 96% - - 90% 91% - -
A - - - 91% 92% 97% 98%
B 94% - - - - - -
C - - - - 89% - 93%
• ABC classification - ABC classification is an indicator that assigns an order of

importance to location products. This order of importance defines the location products
that are most important to The Home Depot’s operations and, as a result, have
additional inventory dollars assigned to them in the form of safety stock. Some of these
may be more important in terms of margin, others in terms of sales, still others as
project completers, which are low sales/margin products that must be available to sell
larger projects.
For example, tile spacers sell for less than $5 a bag but, without them, The Home Depot fails to
sell a project to tile a room(s) that can run into the hundreds of dollars. As a result, this project
completer would have an ABC classification that would give it a higher service level, in spite
of its selling class. The Home Depot Canada has 5 levels of ABC classification, denoted as A-
E. These identify 5 distinct levels for the assignment of a service level value in the Service
Level Profile matrix. On the next page is the Service Level Profiles Overview screen from the
F&R system.
Service Level Profile

The combination of Selling Class and ABC Classification is used to determine service levels in
the Service Level Profile matrix. In addition to the service levels defined in the Service Level
Profile matrix, the Central F&R group may define special service levels that would override
those in the profile in defined situations:
Service Level Description

Service level for new location This service level allows the system to compensate for the
products difficulty in predicting sales for a new product, which can
translate to the need for a higher service level. This service
level is used if the number of past sales periods for a
location product is between three and six.
Service level for determination This service level is used to avoid stockouts in the stock
of stockouts period. If the forecast requirement exceeds the expected
stock, including the expected goods receipts, the system
issues an exception.
Service level for location This service level is used so that the permitted maximum
products with maximum stock stock level is not exceeded. The separate requirement
level calculation determines how many products can be ordered
before the maximum stock level is exceeded.
The safety stock is calculated based on a service level defined in the Service Level Profile by
the selling class and the ABC indicator of a location product or a special service level. If the
selling class or ABC indicator change, the system automatically determines the appropriate
service level in the next FRP run.

The concept of a dynamically calculated safety stock based on service level is a big win for an
inventory management organization. For example, a service level may be set at 95% for a
hammer and a thermostat. Imagine that the hammer and the thermostat sell about the same
number of units over a year, but the sales variability for a hammer is much lower than the sales
variability for a thermostat. A dynamically calculated safety stock might come to 1 week of
supply for a hammer while reaching 4 weeks of supply for the thermostat to support a 95%
service level. This is a great improvement over assigning a static unit or weeks of supply to
these products as safety stock.
Forecast Accuracy - It has been established that no system can

forecast with 100% accuracy. Some products have a consistent
demand pattern over time and a resulting high level of forecast
accuracy. For those products, only a small safety stock would be
needed to meet the assigned service levels. Other products may
have a very erratic demand pattern, resulting in poor forecast
accuracy.
The replenishment calculation must compensate for the lower forecast accuracy by increasing
the safety stock (in absolute terms like days of supply) to achieve the same service level.
Forecast accuracy is not only impacted by demand patterns but also by lead time. The average
lead time for an import product at The Home Depot Canada is 90 days. It is difficult to predict
what demand will be 90 days from now with any degree of accuracy. Again, the safety stock
must increase to account for the resulting drop in forecast accuracy.
The Inventory Analyst must take into account forecast accuracy when considering how much
safety stock may result from the assigned service level target and the impact that this may have
on inventory levels.
Minimum Stock
As discussed earlier in the Master Data section of this course, the Inventory Analyst has the
option to provide a static minimum stock for use in the requirements calculation. F&R also
calculates a dynamic minimum stock during the FRP run for RP types 10 and 11. Both
minimum stocks function as a presentation minimum in the requirements calculation. As a
result, whether static or dynamic, the minimum stock is a quantity of product that should
remain on the shelf at the end of the demand period. It is ordered over and above predicted
demand and safety stock. The system assumes that there is always a need for a presentation
stock on the shelf at the end of the demand period. It assumes that the business does not ever
want to have an empty shelf. If the Inventory Analyst does not provide a static minimum
stock, the system uses the dynamic minimum stock calculated according to parameters in the
Requirements Calculation Profile in the requirements calculation. If both a static and dynamic
minimum stock are present, the system selects one of the two based on settings in the
Requirements Calculation Profile. The following example shows exactly how the dynamic or
static minimum stock is used.

Requirements Calculation Example: Part 1
Using the information described up until this point, the following example demonstrates the
first part of the requirements calculation, as carried out during the FRP run. Revisit the
example from the Behr Paint Order Day Procurement Cycle.

Day Delivery Date
7 Day Lead Time
100 Forecast for Demand Period 1 (DP1)

20 Safety Stock Amount
+ 10 Dynamic Minimum Stock
130 Dynamic Target Stock

Dynamic Target Stock = 130
Dynamic Minimum Stock = 10
Safety Stock = 20
Forecast Demand for DP1 = 100
The goal of the requirements calculation is to reach the dynamic target stock on the first
availability date. This provides enough inventory to maintain the assigned service level
throughout the first demand period.
The dynamic target stock is calculated using the forecast, a forecast-based safety stock and the
minimum stock. This dynamic target stock is used for RP Type 11. The minimum stock used
is the greater of the dynamic minimum stock and the static minimum stock, where present.
For RP Types 09 and 10, the Inventory Analyst has assigned a manual target stock, so a
dynamic target stock is not calculated for these RP Types. The system simply inserts the
manual target stock in place of the calculated dynamic target stock. If a static minimum stock
is present for RP Types 09 or 10, the target stock is equal to the manual target stock plus the
static minimum stock.
+ Profile
+ + + On Order
On Hand and On Order Inventory
The system uses current on hand and any open orders received by the end of the first demand
period to calculate a projected on hand value. This number is subtracted from the target stock
(dynamic or manual), as it is the inventory predicted to be in the store on the availability date,
and so should not be ordered.

How does How do service levels and safety stock impact the F&R calculation?
Write the answer below.
From the previous calculation, the Target Stock was:
100 Forecast for Demand Period 1 (DP1)

20 Safety Stock Amount
+ 10 Dynamic Minimum Stock
130 Dynamic Target Stock
The calculation of the projected on hand is, as follows:
60 Current On Hand Inventory

+ 50 On Order (PO quantities to be received during the first demand period)
- 95 Projected Sales (forecasted sales to occur by the time the PO arrives at the store)
15 Projected On Hand Inventory
130 DynamicTarget Stock

- 15 Projected On Hand
115 Net Requirements
Maximum Stock for the store = 110*
*Indicates that this store has a hard limit for Maximum Stock

If the target stock (including minimum stock) exceeds maximum stock, the rules defining
limits in the requirements calculation profile are applied. For a soft limit, the net requirements
remain unchanged, and an exception is generated to alert the Inventory Analyst that the
maximum stock is exceeded. For a hard limit, the net requirements is changed to reflect a
target stock that is capped at the maximum stock.
The output of the requirements calculation is the un-optimized order quantity or the net
requirements for replenishment. The net requirements are the input to the next step in the
replenishment process, which is requirements optimization.
Notes

2.2 Knowledge Check
Activity: Complete the knowledge check questions to review the material covered to this
point in the course. The answers are in the Solutions Key at the end of this
course.
Multiple Choice
1. What of the following is not a main input for requirements calculation?

a) Master data
b) Requirements calculation profile
c) Forecast
d) Requirement stock
2. The dynamic target stock is calculated using the ___________, _______________

and the ___________________.
a) Forecast, replenishment plan, and ABC indicator
b) Forecast, a forecast-based safety stock, and the minimum stock
c) Requirement stock, replenishment plan and forecast
d) None of the above
3. Because the forecast is never 100% accurate, the system must add additional stock,
known as _____________________.
a) Required stock
b) Master data stock
c) Safety stock
d) All of the above

3.0 Requirements Optimization Process Overview
Replenishment

The next step in the process to create order proposals is Requirement Quantity Optimization.
This process optimizes the location product net requirements by applying predefined
restrictions/conditions, such as case pack quantities (i.e. multiples in which an order must be
placed) and vendor minimums, to the order proposal quantity. The final output of optimization
is the order proposal.
The following profiles and parameters are used in the optimization calculation:
• Unit of measure group for source location
• Unit of measure group for target location
• Requirement quantity optimization profile
• Rounding profile
• Restriction profile
• Optimization Horizon
Requirements ± Logistical rounding profiles

Optimization
± Optimization
± Vendor restrictions
Order Proposals
Unit of Measure Group for Source Location (Vendor/DC)
Unit of measure groups allow The Home Depot to order products in several units of measure.
The system uses unit of measure groups during the rounding processes described below. They
are sometimes referred to as logistical units because they define the units of measure in which
a product may be purchased and subsequently shipped.
The unit of measure group for the source location contains the units of measure that the source
location delivers, i.e. pallets and boxes if a vendor only sends a product in pallets and boxes.
The Inventory Analyst and Merchant assign the unit of measure group to the transportation
lane for products in new article setup, and it is used here by the optimization process to
determine which units of measure are valid for a source location.
Unit of Measure Group for Target Location (Store)
Similar to the previous profile, the unit of measure group assigned to the target location defines
the units of measure that can be sent to that target location. For example, the unit of measure
group can be set so that stores would not be sent a shipping container. The Inventory Analyst
and Merchant assign the unit of measure group to the transportation lane for products in new
article setup, and it is used by the optimization process to determine which units of measure are
valid for a receiving location.
Rounding Profile
F&R uses rounding profiles to ensure that the order proposal quantities are rounded to the
appropriate case pack quantities, as defined by the unit of measure groups. Rounding profiles
are created in THD Tools and transferred to F&R via the interface. The rounding profile
contains the rounding rules. A rule consists of a unit of measure and thresholds for rounding
up and down to this unit. These rounding rules are evaluated according to the maintained
rounding type and rounding mode in the requirements optimization profile. If a case pack is
small, the rounding profile assigned to the location product would probably instruct the system
to round up at all times. If the case pack is large, the rounding profile assigned to the location
product would probably instruct the system to round up only if the raw need is greater than or
equal to 51% of the closest unit of measure.
Note:

Rounding Profile (n/FRE/PRORD)
The T001 Rounding

Profile allows Zero
Rounding for the unit
with the smallest
number of base units.
Requirement Quantity Optimization Profile
The Requirement Quantity Optimization profile provides settings to control the types of
optimization that may be applied to order proposals. One default profile is created and that
profile is assigned to a target location in master data when a new location is created via the
interface with THD Tools. This profile is assigned at the transportation lane for products or
transportation lane for subranges level.
This profile allows each step of the optimization to be turned off across a location. In this case,
the system ignores any assigned profiles in master data. In the case of The Home Depot
Canada, only the Capital Lockup Profile is ignored during optimization. This profile also
controls how rounding rules and restriction checks are applied.
Notes

Requirements Quantity Optimization Profile
Default profiles
are created and
assigned to a
target location in
master data.
All of these are reviewed in the following table:
Sub-Profile Parameters definitions

Basic Settings -Turn off Check of Minimum Order Quantity: If this field is
maintained, the system does not check the minimum order amount, even
if a minimum order amount specified in the master data. This applies to
all location products of a location with this profile.
-No Logistical Rounding: If this field is maintained, the system does
no rounding, even if a rounding profile is specified in the master data.
This applies to all location products of a location with this profile.
-Turn Off Supplier-Specific Minimum Restriction: If this field is
maintained, the system does not consider any minimum restrictions,
even if a restriction profile is specified in the master data. This applies
to all location products of a location with this profile.
-Turn Off Additional Supplier-Specific Restriction: If this field is
maintained, the system considers no additional restrictions, even if a
restriction profile is specified in the master data. This applies to all
location products of a location with this profile.

Rounding -Rounding Type: The parameter defines the rounding type and can
Parameters take the following values:
-Rounding type = 1: This rounding type depends on the individual
logistical unit.
-Rounding type = 2: The threshold values refer to the entire quantity
that is rounded and not to a single unit of
measure.
-Rounding Mode: Based on this parameter, the system determines
which of the valid rounding rules (see rounding type) are used for
rounding the net demand.
-Alternative Rounding: Describes what happens with the net demand
if no rounding rule is valid.
Restriction -Percentage to Discard Order Proposal: The percentage refers to the
Parameters minimum order restriction. If the sum of the order quantities for an
order proposal falls below this percentage, the order proposal is
cancelled.
-Percentage to Ignore Optimization: The minimum order restriction,
in percentage. If the sum of the order quantities for an order proposal is
below this percentage, order optimization does not take place and the
calculated order quantities is not changed.
-Percentage to Ignore Exception: The percentage refers to the
minimum order restriction. If the sum of the order quantities for an
order proposal is above this percentage, the system does not write
exception 220.
-Fill Up Method: The parameter determines whether all products for
the demand period that belong to the supplier of the order proposal are
considered for the order proposal.
Restriction Profile
The Home Depot Canada uses the restriction profile to define and apply the vendor minimum
at the transportation lane for subranges level. Restriction parameters are used to define the
minimum quantity, weight, or price limits for an order proposal. The restriction profile
contains the following sub-profiles:

Restriction -Use Gross Weight: Determines that the weight considered for the
Profile restriction check is the gross weight.

-Use Net Weight: Identifies that the weight considered for restriction
check is net weight.
Minimum -Quantity in Fixed Unit: All products in an order proposal are
Restriction converted to the defined unit and the amounts totaled. The value
calculated for the order proposal must attain at least the value defined
for the first minimum restriction in fixed unit.
-Quantity in Base Unit: All products in an order proposal are
converted to their base units and the amounts totaled. The value
for the first minimum restriction in base unit.
-Quantity in Default Order Unit: All products in an order proposal
are converted to their order units and the amounts totaled. The value
for the first minimum restriction in default order unit.
-Weight: All products in an order proposal are converted to the defined
weight unit and the amounts totaled. In the restriction profile Inventory
Analyst can define whether the gross or net weight is used for the
calculation. The value calculated for the order proposal must attain at
least the value defined for the first minimum restriction in weight.
-Purchase Price: The prices of all products in an order proposal are
converted to the defined currency and then totaled. The value calculated
for the order proposal must attain at least the value defined for the first
minimum restriction in currency.
Additional -Minimum: The value calculated for the order proposal must attain at
Restriction least the value defined for the additional minimum restriction.
-Multiple: The value calculated for the order proposal must be a
multiple of the value defined for the additional multiple restriction. For
example, if the defined value is 5 kg, then the calculated value must be
divisible by 5kg without a remainder.
-Discount Sale: If the value calculated for the order proposal lies
within one of the defined brackets, the defined discount is provided by
the source location for all products maintained in the order proposal.
-No Further Restrictions: There are no additional restrictions.

Below is the restriction profile screen from the system:
Restriction Profile
The Minimum Restriction

for this vendor based on the
Restriction Profile is
Quantity in Fixed Units.
Optimization Horizon
The system applies the restriction profile to assess whether or not the vendor minimum is met.
If it is not met, the system looks at the optimization horizon to determine if further optimization
is possible. The optimization horizon is held on the transportation lane for subranges. Below
is the transportation lane for sub ranges screen. The optimization horizon field is highlighted in
the screenshot below.
Notes

Optimization Horizon (n/FRE/MASS_TRPROD2)
The optimization horizon defines the number of additional demand periods the system may
consider in order to round up to meet the minimum restriction held in the restriction profile. If
the system considers additional demand periods and the vendor restriction still cannot be met,
the requirements quantity optimization profile defines what happens in the restriction
parameters subscreen.
Notes

Below is the Restriction Parameters subscreen:
Requirements Quantity Optimization: Restriction Parameters
The order proposal may not be generated, or it may be generated with an exception.
Once optimization is complete, the system arrives at the final order quantities, and order
proposals are generated.
Notes

Behr Order Proposal
Paint Type Requirements for Order Case Pack Quantity

Interior Latex Paint Net Requirements = 50 8
Exterior Latex Paint Net Requirements = 56 10
The T003 Rounding

Profile rounds up at 51%
and rounds down at 50.9%

When the Rounding Profile is applied:
Behr Order Proposal – Demand Period 1 (DP1)

Restriction Profile: Minimum restriction, Quantity in Base Units = 200

Optimization Horizon: Two demand periods
The rounded total order quantity for DP1 is 118 units. This is not enough to meet the vendor
minimum restriction. The Optimization Horizon, however, allows the FRP run to look out one
more demand period to meet the minimum.
Behr Order Proposal – Demand Period 2 (DP2)


Day Delivery Date
7 Day Lead Time

Total Rounded Order Quantity for DP1 and DP2
Paint Type Requirements for Order CasePack Quantity Rounded to:

Interior Latex Paint Net Requirements = 78 8 80 units
Exterior Latex Paint Net Requirements = 110 10 110 units
Total order proposal quantity is 190. According to the restriction profile, the order proposal
will be created with an exception because the order does not meet the minimum restriction.
Notes

3.1 Knowledge Check
course.
Multiple Choice
1. What are the main inputs to the optimization calculation?

a) Unit of measure group for source location
b) Requirement quantity optimization profile
c) Rounding profile
d) Optimization horizon
e) All of the above
True/False
2. The Optimization Horizon defines the number of additional demand periods the
system may consider in order to round up to meet the minimum restriction held in
the Restriction Profile.
3. F&R uses rounding profiles to ensure that the order proposal quantities are
rounded to the appropriate case pack quantities, as defined by the unit of measure.

4.0 Order Proposal Release Management
Replenishment

As part of the FRP run, after F&R uses the optimization requirements to create an order
quantity, F&R generates an order proposal. This order proposal (OP) is transmitted to THD
Tools to create a purchase order. If an OP is not released, it cannot be transmitted to create a
purchase order. Three things determine how OPs are released and transmitted to THD Tools to
create Purchase Orders:
• Release profile
• Exceptions
• Release job scheduling
Release Profile
A release profile is a condition that is reviewed at the end of the FRP run. If an order proposal
(OP) meets the conditions in the release profile, it is released. Otherwise, the OP is blocked for
release and is not able to be transmitted to THD Tools to create a Purchase Order unless it is
manually released by an Inventory Analyst.
Currently only one release profile is set up in F&R for The Home Depot Canada. It is applied
at the source location level for Lumber DCs. All OPs from the stores to the Lumber DCs are
blocked for release. This requires the Inventory Associates at the stores to review and release
these OPs manually. Creating store orders for the Lumber DC requires load-building
capabilities not currently available in F&R. The Inventory Associates at the stores manually
build the load for these orders and then release them for transmittal to THD Tools by 10 am
each day. The business may see a need in the future to apply other Release Profiles to block
the transmittal of certain OPs to THD Tools.
The Release Profile contains the following sub-profiles and parameters:
Sub-Profile Parameters Definitions

Order -Type: Release conditions can be defined with the following types:
Proposal
Condition -Maximum conditions: Defines upper bounds for order proposals
related to the release condition dimension.

Sub-Profile Parameters Definitions
-Minimum conditions: Defines lower bounds for order proposals
related to the release condition dimension.
-Existence conditions: Check for occurrences of objects (specified
products or merchandise categories) in order
proposal. If the defined object is identified within
the order proposal, manual release is requested
-Dimension: Order Proposal Release Condition Dimension
-Threshold Value: Defines a lower or upper limit based on the
dimension of a release condition. If the related order proposal does not fit
the condition limit (fall below minimum, exceed maximum), the order
proposal has to be released manually.
-Priority: Defines the priority of an order proposal release condition, that
is, the priority for manual release if the condition is fulfilled.
-Valid-to Date: Defines a fixed point up to which the release condition is
valid and checked.
Profile -Target Location Type: The location type and valid values are
Assignment distribution centers and stores.
-Target Location: Identifies a destination location.
-Description: The target location description.
-Source Location Type: The location type and valid values are vendors,
distribution centers and stores.
-Source Location: Identifies a source location.
-Description: The source location description.
-Vendor Subrange: Defines the subdivision of a vendor's entire product
range.
Notes

Below is the Release Profile Description screen:
Release Profile Description
Release Profile Name and

Description
Exceptions
One of the main outputs of the FRP run is exceptions. Exceptions are system-
generated messages to Inventory Analysts to inform them of unusual conditions
detected in the FRP run. For purposes of Order Proposal Release
Management, it is important to understand that some exceptions may block
OPs from release. Inventory Analysts part of the Central F&R group and
Inventory Associates at the store are responsible for resolving the exceptions
during the day and releasing blocked OPs for transmittal to THD Tools by 6pm
every evening. Exceptions and the exception management process are covered in greater detail
in the Central Ordering training course.
Release Job Scheduling
Released order proposals (i.e. OPs that are not blocked due to exceptions or release profile) are
transmitted to THD Tools according to the release job scheduling. The release job
(FRE/OPM_MASSREL) releases and transmits OPs to THD Tools.
This job is currently scheduled to run in the morning so that Lumber DC (LDC) orders from
the stores are transmitted to allow the LDCs to turn the orders around in one day. All other
OPs are transmitted to THD Tools at 6 pm. There is no automated release of OPs, although
this is permitted in the release job. All OPs that remain blocked at 6 pm are deleted and are not
transmitted to THD Tools. If blocked OPs are not released by Inventory Analysts and
Associates during the day, they are deleted. Below is the Mass Release of Order Proposals
screen from the system:
Mass Release of Order Proposals (n/FRE/MASSREL)
Notes

4.1 Knowledge Check
course.
Multiple Choice
1. Which of the following is not one of the main inputs in the order proposal
management process?
a) Release profile
b) Exceptions
c) Outsourcing profile
d) Release job scheduling
2. ______________are system-generated messages to Associates to inform them of

unusual conditions detected in the FRP run.
a) Profiles
b) Exceptions
c) Forecasts
d) Restrictions
Short Answer
3. What is the difference between the requirements calculation, the optimization
calculation, and order proposal management? Write the answer below.

5.0 Replenishment for Distribution Centers (DCs)
PO STO
Vendor THD DC THD Store
The replenishment process for the DCs differs from the replenishment process for stores in the
following ways:
Order proposals for the stores receiving goods from the DCs are created as stock transfer orders
(STOs) in THD Tools. STOs are types of purchase orders that support goods movements from
store to store, DC to DC or DC to store.
Purchase orders created from lumber DCs and import DCs to vendors are blocked in THD
Tools. Each of these orders are blocked so that containerization or load building can be
completed. Containerization is the process of optimizing what items go into a shipping
container. This task is completed by the vendor in the case of Imports and DCs in the case of
lumber orders. The containerization and load building processes are covered in detail in a
purchase order management course.
Release profiles are used to block orders for import vendors when the Merchant has an
agreement with the vendor to buy a certain quantity of product through domestic vendor, also
known as domestic fill-in.
The Inventory Analyst reviews all of these orders manually to determine what quantities should
be ordered from the domestic fill-in vendor. All domestic orders are created manually as
purchase orders in THD Tools.
Notes

For example, when The Home Depot places an order for air conditioners, an agreement is
made with the vendor to buy a certain percentage domestically and the remainder from another
country, such as China.
75%Domestic
25%
China
The Home Depot has an obligation to buy goods from domestic fill-in per the agreement.
However, F&R only generates orders for the primary import vendor, the goods coming from
China. The Inventory Analyst has to review all order proposals and make sure the domestic
fill-in obligation is met. The release profile can be used to block these order proposals from
being released until the Inventory Analyst completes the review. The Inventory Analyst may
also decide to change the primary source of supply for the location product instead of using the
release profile. This is covered more fully in the Sourcing Changes training course.
Notes

5.1 Knowledge Check
course.
Multiple Choice
1. Which of the following is an example of how the import replenishment process

differs from the store replenishment process?
a) The Inventory Analyst cannot choose to change the primary source of supply
for the location product instead of using the Release Profile.
b) Release profiles are not also used to block orders for import vendors when
the Merchant has set up domestic fill-in.
c) Purchase Orders created from lumber DCs and import DCs to vendors are
blocked in THD Tools
d) Order proposals for the stores receiving goods from the DCs are not created
as STOs in THD Tools
2. Purchase orders created from lumber DCs and import DCs to vendors are
_____________in THD Tools.
a) Visible to stores
b) Blocked
c) Not available
d) None of the above
3. Order proposals for the stores receiving goods from the DCs are created as
___________________in THD Tools.
a) Purchase orders (POs)
b) On hand orders
c) Stock Transfer Orders (STOs)
d) Replenishment types (RP Types)

6.0 Review
The Replenishment course provided details on the replenishment process within F&R. The
Inventory Analyst should now understand:
• The Replenishment Calculation (net requirements)

• The requirement quantity optimization calculation
• Order Proposal management
F&R (Forecasting & Replenishment) provides automated replenishment capabilities. The

system uses a statistical forecast or a manual target stock and reorder point as the basis for
requirements calculation and order quantity optimization. This process takes place nightly
during the batch run of the FRP (Forecasting and Replenishment Processor) according to a pre-
defined schedule.
The replenishment process is divided into three high level steps: requirements calculation,
requirements optimization and order proposal management.
The first step in the replenishment process is the requirements calculation. There are five inputs
to the requirements calculation are: master data, requirements calculation profile, forecast,
safety stock, and on hand an order stock.
The next step in the process to create order proposals is requirement quantity optimization.
This process optimizes the location product net requirements by applying predefined
restrictions/conditions, such as case pack quantities (i.e. multiples in which an order must be
placed) and vendor minimums, to the order proposal quantity. The final output of optimization
is the order proposal.
The following profiles and parameters are used in the optimization calculation:
• Unit of measure group for source location

• Unit of measure group for target location
• Requirement quantity optimization profile
• Rounding profile
• Restriction profile
• Optimization Horizon

The final step is order proposal management. As part of the FRP run, after F&R uses the
optimization requirements to create an order quantity, F&R generates an order proposal. This
order proposal (OP) is transmitted to THD Tools to create a purchase order. If an OP is not
released, it cannot be transmitted to create a purchase order.
Notes

7.0 Next Steps
Please reference site http://helplibrary.homedepot.com/score for the simulations and processes

discussed earlier in this course.
In addition, THD Tools has several help functions. These help functions provide information
about the components of the THD Tools and explain how to use them.
The [F1] button opens the help section of THD Tools. The following options can also be
selected from the help menu:
Menu option Help
Application Help Context-sensitive help for tasks
SAP Library An online library of SAP documentation
Glossary Definitions for terminology used in SAP
Release Notes Information about enhancements and changes to SAP releases
In addition, the SAP Help Portal, located at Help.SAP.com, provides web-based

documentation for all SAP Solutions.
Associates can access practice exercises in the training environment and use the current log on
information for future use. If there are any other questions that cannot be answered using these
options, please direct them to the Coach.
CONGRATULATIONS!
You have just completed the Replenishment course.

Please complete the Learning Evaluation on the last page of this guide.

Solutions Key
2.1 Requirements Calculation
Question: How do service levels and safety stock impact the F&R calculation?
Answer: The exception is parked in a recycling queue where the invoice may find a
match to a newly entered or updated Goods Receipt/Purchase Order, or the
invoice may require the system or an Associate to identify and resolve the
exception if the invoice remains parked 10 days prior to the payment due date.
2.2 Knowledge Check
Question: What of the following is not a main input for requirements calculation?
Answer: d) Requirement stock
Question: The dynamic target stock is calculated using the ___________,

_______________ and the ___________________.
Answer: b) Forecast, a forecast-based safety stock, and the minimum stock
Question: Because the forecast is never 100% accurate, the system must add additional
stock, known as _____________________.
Answer: c) Safety stock
3.1 Knowledge Check
Question: What are the main inputs to the optimization calculation?

Answer: e) All of the above
Question: The Optimization Horizon defines the number of additional demand periods
the system may consider in order to round up to meet the minimum restriction
held in the Restriction Profile.
Answer: True
Question: F&R uses rounding profiles to ensure that the order proposal quantities are
rounded to the appropriate case pack quantities, as defined by the unit of
measure groups.
Answer: True

4.1 Knowledge Check
Question: Which of the following is not one of the main inputs in the order proposal
management process?
Answer: c) Outsourcing profile
Question: ______________are system-generated messages to Associates to inform

them of unusual conditions detected in the FRP run.
Answer: b) Exceptions
Question: What is the difference between the requirements calculation, the

optimization calculation, and order proposal management?
Answer: Requirements calculation – Provides the raw, unoptimized need at the store
Requirements optimization – Takes the unoptimized need and applies logistical
rounding and restrictions
Order Proposal management – Controls the release of OPs so that they may be
transmitted to THD tools
5.1 Knowledge Check
Question: Which of the following is an example of how the Import replenishment

process differs from the store replenishment process?
Answer: c) Purchase Orders created from Lumber DCs and Import DCs to vendors
are blocked in THD Tools
Question: Purchase Orders created from Lumber DCs and Import DCs to vendors are
_____________in THD Tools.
Answer: b) blocked
Question: Order proposals for the stores receiving goods from the DCs are created as
___________________in THD Tools.
Answer: c) Stock Transfer Orders (STOs)

Appendix
Supporting Documentation
Business Process Procedures (BPPs):

This course does not require BPPs.
Manual Process Procedures (MPPs)

• New Article Introduction
Simulations
This course does not require Simulations.
How to Access BPPs, MPPs and Simulations
Use the instructions below to access supporting documentation to assist in performing

transactions in the training environment.
When working in a transaction screen in the training environment:

1. Access supporting documentation for a transaction within the training environment by
clicking the Help option from the menu bar while in the transaction.
2. Select the Help Now option from the drop down list. This will prompt a help window
from http://helplibrary.homedepot.com/score to appear to assist with the specific
transaction being used by the Associate.
3. When the pop-up window for the transaction appears, select the viewing format from
the drop down menu at the top of the pop-up window. Viewing formats include: Cue
Card, Work Instruction or Simulation (where available).

Alternatively, supporting documentation can be accessed using an internet browser:
1. Access supporting documentation using http://helplibrary.homedepot.com/score.
2. From the menu on the left side of the screen select Non-Store.
3. Select the functional area of the course (i.e. Finance, Supply Chain, Foundation).
4. Select the process area within the functional area.
5. Select the appropriate title of the supporting document (BPP, MPP or SIM).
6. Select the preferred viewing format from the drop down menu at the top of the
supporting document to view a Cue Card (shortened) or Work Instruction (full text)
version of the transaction or a Simulation where available.

Learning Evaluation
Course Title: Replenishment Date:
Please circle the number that most closely matches your reaction to each statement & add comments as
needed
1=strongly disagree 2=disagree 3=neither 4=agree 5=strongly agree
CONTENT
The content level was appropriate for my knowledge and experience 1 2 3 4 5

The learning subject matter was sufficiently detailed and contained
enough information 1 2 3 4 5
DESIGN
The activities and exercises gave me sufficient practice and feedback 1 2 3 4 5
Time allowed for each topic, practice and the learning experience
1 2 3 4 5
overall was sufficient
DELIVERY
The learning was delivered effectively and enabled me to learn the
1 2 3 4 5
subject matter
The material was delivered in a manner that was clear and easy to
1 2 3 4 5
understand
Learning objectives were clearly presented and achieved 1 2 3 4 5
IMPRESSIONS
The knowledge and/or skills gained through this learning experience
1 2 3 4 5
are directly applicable to my job
I will use the knowledge and/or skill gained through this learning
1 2 3 4 5
experience on my job
ADDITIONAL FEEDBACK
What did you like best about this learning experience?
What did you like least about this learning experience?
How will you apply these skills on the job?
PLEASE RETURN THIS EVALUATION TO YOUR COACH.

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Facilitated Learning Guide

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Keep in mind the suggested time allowed for this module.

Complete the exercise in the training environment.

Complete the activity in the guide.

Represents a concept or idea.

This is a key concept to the module.

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• Define the replenishment calculation

Course Length: 2 Hours, 45 Minutes

Pre-Requisites Courses: Nuts & Bolts of THD Tools

Supporting Documentation: A list of supporting documents and system access instructions

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Suggested Time: 5 Minutes

Replenishment A Method of replenishing stock at stores. The Home Depot offers

For example, the procurement cycle for a Ryobi Drill indicates

Requirements Determine the future requirements expected for a location/product

For example, The Home Depot store 9001 is low on energy

Optimization This process optimizes the location product net requirements by

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For example, a 95% service level sets a systematic goal to be in-

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Suggested Time: 15 Minutes

Calculate Calculate Optimize Manage

Calculate Calculate Manage Release

F&R (Forecasting & Replenishment) provides automated replenishment capabilities. The

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Suggested Time: 45 Minutes

Calculate Calculate Optimize Manage

The following items fall under the topic of master data:

Replenishment Type (RP Type)

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Replenishment Type and Description (FRE/MASS_MATLOC)

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Master Data Element Description Example

Planning Calendar (n/FRE/SAPAPO/CALENDAR)

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Procurement Cycle Maintenance (n/FRE/SCHEDULE)

For the procurement cycle

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Procurement Cycle Maintenance (n/FRE/SCHEDULE)

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Consider this example: The Home Depot store #7001

Behr Paint Order Day Procurement Cycle

Order 1st Availability Date/

Stock Period Demand Period 1 (DP1) Demand Period 2 (DP2)

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Additional Location Product Master Data (/n/FRE/MASS_MATLOC)

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Requirements Calculation Profile

Requirements Calculation Profile

Sub-Profile Parameter definitions

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-Limit type = 0: The maximum stock is a soft limit. It can be

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Service Level Graph

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Default value USS1 USS2 SS1 SS2 FS1 FS2

Default value 96% - - 90% 91% - -

A - - - 91% 92% 97% 98%

• ABC classification - ABC classification is an indicator that assigns an order of

2. The dynamic target stock is calculated using the _, _____