Use this program to close the current inventory period.
The program rolls usage rates back one period and sets qualified usage for the most recent period. The program also resets order points, line points, minimum and maximum stocking levels and order quantities. The safety stock dip % and the number of days stockout (number of days item is out of stock) are updated. Month-to-date figures are set to zero and year-to-date figures are rolled to prior year, if it is year-end. Items are also flagged if usage is unusual. (Items are not flagged, however, if they have not yet accumulated six months of usage.) Items that have frozen controls have the number of periods to freeze reduced by one period. Items that ignore low sales have the number of periods to ignore low sales reduced by one period. All period activity (sales, adjustments, etc.) is cleared.
This program flags usage for high sales, low sales and/or stock outs for stocked items with the warehouse level Replenish flag (on the Main view of Warehouse/Item F/M) set to "selected". If the item is not a stocked item with the warehouse level replenishment flag set to "selected", then the item’s usage will not be flagged. Also, the restocking controls will not be reset if the replenishment flag is not set to "selected".
Usage is the amount of movement (sales, transfers out, manufacturing components) for a stocked item in a month (i.e., amount used in a month).
The usage for the period must be qualified, (i.e., usage is set). The item is flagged (usage is disqualified) in the following cases:
Finally the usage rate is calculated. For highly seasonal items the usage rate is calculated as the average usage of the upcoming 3 periods based on those 3 periods as of a year ago. For seasonal items the usage rate is calculated as the average usage of the upcoming 6 periods based on those 6 periods a year ago. For non-seasonal items the usage rate is calculated as the average usage of the last six periods.
The last five lead times and average lead time (average of last two lead times) are updated and maintained by the system any time inventory is received into the warehouse. The lead time is flagged at the time inventory is received if it is abnormal. An abnormal lead time is one in which the new average is 50% shorter or longer than the previous average.
If the adjustment type is "R" for receipt and the restocking warehouse is direct from the vendor, the lead-time is set to abnormal only if the item is stocked and the replenishment flag (located on the Main view of Warehouse/Item F/M) is selected. Otherwise, the lead-time flag is blank.
If usage is qualified the program resets the order quantity.
If the order quantity method is set to movement class the movement class calculation is used to set the order quantity. The movement class (set in the warehouse/item record) is the number of months for which to supply stock. If the movement class is 7, then 7 months supply is the order quantity. The order quantity is calculated as the usage rate X movement class. If the usage rate of the item is 10, then the order quantity is set to 70 (i.e., 10 X 7).
If the order quantity method is set to EOQ the order quantity is set to the following:
If "R" cost (set in the warehouse record) is $5.00, usage rate (set previously in this program) is 20, "K" cost (set in warehouse record) is .30 (30%) and unit cost is $7.00 then the EOQ calculation is as follows:
(Rounded off to even units)
The EOQ answer may be rounded off to the nearest standard package, up to a minimum two week supply or a maximum one year’s supply, or adjusted according to the product line’s review cycle.
If the order quantity method is set to manual, the order quantity calculation is skipped.
After the order quantity is set, the program sets the order point and line point if the restocking method is set to order point/line point or the minimum stock and maximum stock if the restocking method is set to min/max.
The order point is calculated as follows:
Order point = (usage rate X lead time) + safety stock
(Lead time is in months; safety stock = (usage rate X lead time) X safety allowance). If the usage rate is 20 and the lead time is 30 days and the safety allowance is 50% the order point is set to 30.
The line point is calculated as follows:
Line point = order point + usage rate during review cycle
If the order point is 30, the usage rate is 20 and the review cycle is 1-1/2 months the line point is set to 60.
The minimum stock is calculated as follows:
Minimum stock = (usage rate X lead time) + safety stock (same as order point)
If the usage rate is 20, the lead time is 30 days and the safety allowance is 50% the minimum stock is set to 30.
The maximum stock is calculated as follows:
Maximum stock = minimum stock + order quantity
If the minimum stock is set to 30 and the order quantity is 20 the maximum stock is set to 50.
The safety stock dip % is the percentage of use of the safety stock.
The safety stock = the safety allowance X usage X lead time. The system has the lowest on hand quantity stored per item for the period. If the safety stock equals 100 and the lowest on hand quantity for the period is 80, the safety stock dip percent is 20% (i.e., 20% of the safety stock was used).
Finally the number of periods to freeze controls and number of periods to ignore low sales is reduced by one period (if not a permanent freeze).
To access this program, click Inventory Control>End of Period >End-of-Period Update.
Check the Close-Out Period check box to indicate whether to close out the current inventory period. Press Specify to default to selected.
Indicate whether the activity report has been run.
Click OK.
Processing note
When you access the End of Period Update, the system displays a message indicating the programs that must be run, such as the Cost Discrepancy or Adjustment Register, before you can run the End of Period Update program.
Run the program indicated in the message and then re-access the End of Period Update to close the current period.
When you run the End of Period Update, the program displays a message indicating the current inventory period to be closed, that period-to-date and activity will be set to zero and year-to-date figures will be rolled to zero, the number of days since the last period closed and any reports that need to be run after processing the update.
Press OK to run the End of Period Update program. The system displays a message asking if you are sure you want to close the period (there is no undo).
Click Yes-Close to run the close the current period.