Threshold Minimum Usage
When new items are setup to be stocked in a warehouse, there is usually an expected or projected sales/usage amounts. Instead of creating fictitious usage amount for historic dates, you can establish a T-Min usage amount with an expiration date.
When calculating usage for the item, actual usage data will be evaluated, and if it is below the T-Min usage, the T-Min value will be used.
| T-Min Usage Quantity | The quantity to use as the minimum monthly usage. |
| Expiration Date | The date the T-Min Usage quantity expires and is no longer used. An alert will be generated prior to the expiration per the above settings. |
| Memo | Memo explaining the purpose for the T-Min and why it is this value. |
T-Min Usage Adjuster
“T-Min” is a term used to indicate a threshold or minimum limit placed on a value. In the case of usage, T-Min is the lowest value we will use when calculating usage. This value is stored as a monthly number, but is used to determine the minimum ADU for an item by dividing it by 30 days.
When FACTS calculates ADU, it then checks to see if a T-Min Usage has been established. If so, and the T-Min is higher than the calculated ADU, ADU if forced up to the T-Min.
This can be especially helpful for newly-established items where there is not sufficient history to calculate a reliable ADU. If your sales team believes they will sell 10 units of a new item per month, setting up a T-Min Usage of 10 will cause FACTS to act (for purchasing purposes) as if you were selling 10 units. However, if sales take off, and you are actually selling 20 per month, the T-Min will be ignored.
Since T-Min Usage changes ADU, it cascades to impact safety stock, order point and line point. As a result, it’s not the best way to establish minimum stock levels. It truly causes FACTS to act as if usage was different.
When calculating usage for an item with usage type Trend, it’s not unusual for the math to calculate extreme values, especially at the beginning or end of a season or when there is minimal data to use. For example, if a very large order (for example 1000 EA) was placed at the very beginning of the season this year, but total orders last year was only 10 EA, a trend of 10000% would be calculated, and the system would indicate to order unreasonably high quantities.
If the years were reversed, the trend would be 1%, causing FACTS to order far too few.
As the season progressed of course, these numbers would work themselves out to reasonable, accurate numbers, but to avoid unrealistic values, you can establish fences for the minimum and maximum trend %s allowed.
Trending Parameters and Adjusters
T-Min Usage is typically associated with a new item that should be generating expected sales levels. If the expected sales results are not being met, the T-Min usage should be reviewed.
To help with this, an alert can be generated when the expected # hits is not achieved in the given timeframe.
If a threshold minimum is applied to an item, the minimum and maximum usage can be enforced to eliminate excessive spike / trough values. This will result in a specific range for trending in order to “smooth” the trend curve. A required number of usage hits in the prior and current year can be entered and required in order for the minimum and maximum to be applied. If the current or prior year hits are not achieved when supplied, the minimum and maximum values will not be enforced.
| Apply seasonal trend minimum and maximum | Indicate whether to apply a minimum and maximum trend percentage. |
| Minimum Trend % | The value for Minimum Trend percentage to apply when forecasting usage. |
| Maximum Trend % | the value for Maximum Trend percentage to apply when forecasting usage. |
| Prior Year Hits | The value for the hits the item must have had last year before allowing a trend to be applied. |
| Current Year Hits | The value for the hits the item must have this year before allowing a trend to be applied. |
| Expiration Date | The date the trend % minimum and maximum expires and is no longer used. An alert will be generated prior to the expiration per the above settings. |
| Memo | Memo explaining the purpose for the trending. |
Rank refers to the activity level of an item in a particular warehouse. The rank values are from A thru E, with the A items being the faster moving items and E the slowest moving items.
Hits can be either document hits (i.e. the number of times an item appears on a document) or customer hits (i.e. the number of customers that purchased the item).
The Rank can be based on the hits for an item compared to the total hits in a warehouse. This Ranking method is a percentage based Rank. Alternatively, the Ranking method can be defined as a range of Hits. An item’s Rank will be derived from the number defined hits per Rank. An example of the setup for Rank by warehouse for each method can be view below.
A minimum number of usage hits can be assigned to delay the calculation of an item’s rank by usage. This hit count must occur within a specified number of periods, or the item’s ranking will not be calculated.
| Rank A | The number of months to analyze when calculating average usage for an A ranked item. |
| Rank B | The number of months to analyze when calculating average usage for a B ranked item. |
| Rank C | The number of months to analyze when calculating average usage for a C ranked item. |
| Rank D | The number of months to analyze when calculating average usage for a D ranked item. |
| Rank E | The number of months to analyze when calculating average usage for an E ranked item. |