Oracle Inventory Min–Max Planning

Min–Max Planning

You can use min–max planning to maintain inventory levels for all of your items or selected items. With min–max planning, you specify minimum and maximum inventory levels for your items. When the inventory level for an item (on–hand quantities plus quantities on order) drops below the minimum, Oracle Inventory suggests a new purchase requisition, internal requisition, move order, or job to bring the balance back up to the maximum.

Oracle Inventory performs min–max planning for your items at either

• Organization level
• Sub inventory level.

When you min–max plan at the organization level, you can optionally include the following transactions as demand in the min–max planning calculation:

Unreserved sales orders,  reserved sales orders, account issue move orders, and work in process component requirements. Purchase requisitions and internal requisitions for buy items and WIP unreleased jobs for make items for the suggested replenishment quantities can be optionally created. You can then turn these requisitions into purchase orders or internal orders and the unreleased jobs into jobs for the required items.

Organization Level Min–Max Planning

When you min–max plan at the organization level, Oracle Inventory looks at inventory balances, purchase requisitions, internal requisitions, internal sales orders, and WIP jobs as supply. It looks at sales orders, WIP job component requirements, and account issue move orders as demand.

To use min–max planning at the organization level, you must set the item attributes used by min–max planning. You can start by setting the Inventory Planning Method item attribute to Min–max planning. You establish your minimum and maximum levels used in the calculation using the Min–Max Minimum Quantity and the Min–Max Maximum Quantity item attributes. You can optionally set the order quantity modifier item attributes (Minimum Order Quantity, Maximum Order Quantity, and Fixed Lot Size Multiplier) to further control the suggested order quantities generated by min–max planning. Set the Make or Buy flag to Make to optionally generate unreleased jobs and to Buy to optionally generate requisitions. For buy items, set the List Price for the item to automatically generate requisitions. 

For repetitive items, since you cannot generate repetitive plans, you have the option of generating requisitions, unplanned jobs, or a report only.

Min–max planning is performed by running the Min–Max Planning report. By selecting organization level planning, you run min–max planning for your organization. In addition to the planning level option, Oracle Inventory offers the options to Net Reserved Orders, Net Unreserved Orders, Net WIP Demand, and Include Non–nettable Inventory Quantities when calculating availability. You also specify a Demand Cutoff Date and a Supply Cutoff Date.

 If you choose No to all the net demand options, Oracle Inventory performs the following calculation:

• Nettable Quantity on Hand + On Order = Total Available, in which:

• Nettable Quantity on Hand is the sum of the quantities on hand for the item across all the nettable subinventories within your organization. Non–nettable quantities may optionally be included.
• On Order is the sum of open purchase orders, purchase requisitions, internal requisitions, internal orders, and work in process jobs scheduled for receipt on or before the supply cutoff date.

• If Total Available < Minimum Quantity, suggest a new order, in which:

• Minimum Quantity is the value for the Min–Max Minimum Quantity item attribute.

• Order Quantity = Maximum Quantity – Total Available, adjusted for order quantity modifiers:

• Oracle Inventory revises the order quantity if necessary for the quantity to be a multiple of the fixed lot size multiplier.
• The order quantity must be greater than or equal to the minimum quantity, or Oracle Inventory revises the quantity upward to the minimum.

If you choose Yes to any of the net demand options, Oracle Inventory performs the following calculation:

• Nettable Quantity on Hand + On Order – Open Demand = Total Available, in which

• Nettable Quantity on Hand is the sum of the quantities on hand for the item across all the nettable subinventories within your organization. Non–nettable quantities may optionally be included.
• On Order is the sum of open purchase orders, requisitions, internal orders, and work in process jobs scheduled for receipt on or before the supply cutoff date.
• Open Demand is the sum of unreserved sales orders, inventory reservations, including reserved sales orders, account issue move orders, and WIP component demand scheduled for issue on or before the demand cutoff date.

• If Total Available < Minimum Quantity, suggest a new order, in which

• Minimum Quantity is the value for the Min–Max Minimum Quantity item attribute.

• Order Quantity = Maximum Quantity – Total Available, adjusted for order quantity modifiers:

• Oracle Inventory revises the order quantity if necessary for the quantity to be a multiple of the fixed lot size multiplier.
• The order quantity must be greater than or equal to the minimum quantity, or Oracle Inventory revises the quantity upward to the minimum.
• The order quantity must be less than or equal to the maximum quantity, or Oracle Inventory revises the quantity down to the maximum.

When you run the Min–Max Planning report, you can have Oracle Inventory create requisitions for buy items and unreleased jobs for make items by answering Yes to Restock. You must also specify a ocation to serve as the default deliver to location on the requisitions. Oracle Inventory creates purchase requisitions for Buy items when the item attribute Replenish ment Source Type is set to Supplier. Oracle Inventory creates internal requisitions for internal sales orders for Buy

items when the item attribute Replenishment Source Type is set to Inventory. For internal requisitions, Oracle Inventory uses the item attribute Source Organization to determine the organization from which the internal requisition sources the item. For Repetitive Items you optionally create requisitions or unreleased jobs.

The following example shows you how Oracle Inventory performs min–max planning. Assume an item has the following quantity values and item attribute settings:

• Nettable quantity on hand = 25
• Open supply quantity = 50
• Open reserved sales order quantity = 90
• Inventory planning method = Min–max planning
• Min–max minimum quantity = 100
• Min–max maximum quantity = 500

If you run the Min–Max Planning report, and specify No to Net Reserved Orders, Oracle Inventory performs the following calculations:

• Total Available: 25 + 50 = 75

• We assume that all the supply is within the supply cutoff date, for a supply total of 50.
• Total available quantity is 75.

·  Below min check: 75 < 100

o    The total available quantity is less than the min–max minimum quantity, so Oracle Inventory plans a new order.

• Max quantity less total available: 500 – 75 = 425

• To bring the quantity available back to the min–max maximum, Oracle Inventory will plan an order for 425.

If you run the Min–Max Planning report, and specify Yes to Net Reserved Orders, Oracle Inventory performs the following calculations:

• Total Available: (25 + 50) – 90 = (–15)

• We assume that all the supply is within the supply cutoff date, for a supply total of 50.
• We assume that all the demand is within the demand cutoff date, so open reserved orders total to 90.
• Total available quantity is (–15).

·  Below min check: (–15) < 100

• The total available quantity is less than the min–max minimum quantity, so Oracle Inventory plans a new order.

• Max quantity less total available: 500 – (–15) = 515

• To bring the quantity available back to the min–max maximum, Oracle Inventory will plan an order for 515.