The Manage Inventory Policies page allows you to create inventory policy types and policies, and set each policy's parameters.

Before you start

Before you can create a policy, you must have at least one policy type.

Parameters

ParameterValue
Reorder Point Strategy

Specifies when new inventory can be received rather than when orders can be placed. The value selected dictates which of the Periods per Review, Minimum Days Supply, and Minimum Days Supply columns require completion. The values are: 

  • Days Supply: Inventory is ordered so it's received to prevent the closing balance dropping below a minimum. The minimum is expressed in terms of number of days of future demand.   
  • Periods Supply: Inventory is ordered so it's received to prevent the closing balance dropping below a minimum. The minimum is expressed in terms of number of periods of future demand.
  • Periodic Review: Inventory is ordered so it's received in line with a determined review cycle. For example, once every four months.  
  • Fixed Quantity: Inventory is ordered so it's received to prevent the closing balance dropping below a minimum. The minimum is expressed as a fixed input against the product-location.   
  • Do Not Order: New inventory receipts aren't allowed.
Periods per ReviewSpecifies the number of periods between which the inventory can be received at the location.
Minimum Days SupplySpecifies the minimum days of demand that the closing inventory needs to cover. 
Minimum Periods SupplySpecifies the minimum periods of demand that the closing inventory needs to cover. 
Target Level Strategy

Specifies the basis for setting an inventory target. The value selected dictates which of the Target Basis, Target Days Supply, and Target Days Supply columns require completion. The values are: 

  • Calculated: When new inventory is received, the quantity is set to take the closing balance up to a maximum. The Target Basis value controls the maximum value.
  • Fixed: When new inventory is received, the quantity will be set to take the closing balance up to a maximum. That maximum is a fixed input for the particular product-location.  
Target Basis

Controls how the maximum inventory value is calculated. The values are:

  • Days Supply: Expresses the maximum inventory value in terms of number of days of future demand. 
  • Period Supply: Expresses the maximum inventory value in terms of number of periods of future demand.
  • Service Level: Expresses the maximum inventory value in terms of a service level. If selected, the Service Level Type, Target Service Level/Fill Rate, and Input to Safety Stock fields require completion.
Target Days SupplySpecifies the maximum days of demand that the closing inventory needs to cover. 
Target Period SupplySpecifies the maximum periods of demand that the closing inventory needs to cover. 
Service Level Type

Specifies the service level. The value are:  

  • Cycle Service Level: The service level means the probability of not stocking out in a given period. 
  • Fill Rate: The percentage of demand that's likely to be met. 
Target Service Level/Fill RateSpecifies the probability or percentage expressed in terms of the service level type. 
Input to Safety Stock

Specifies the measure of variability the safety stock needs to protect against.   

  • Demand Variability: Uses standard deviation of selected history. 
  • Forecast Error: Uses an average forecast error. 
  • Corrected Forecast Error: Uses an average forecast error after outlier correction.   
Allow Plan OverridesControls whether the plan can be overridden.



Steps

Inventory Policy Types

The Manage Inventory Policy Types card allows you to create and delete inventory policy types. Policy types group your inventory policies into a logical structure. They don't control the behavior of the policies themselves.

To create an inventory policy type:

  1. Select Add Inventory Policy Type.
  2. Specify a Name and Policy Type Name.
  3. Select Submit.

To delete an inventory policy type:

  1. Select the Delete? box to the right of the policy types to be deleted.
  2. Select Delete Inventory Policy Type.

Inventory Policies

The Manage Inventory Policies card allows you to create and delete inventory policies. They're central to ‌inventory plan calculation.

To create an inventory policy:

  1. Select Add Inventory Policy.
  2. Specify a Parent and Policy Name.
  3. Select Submit.
  4. Change the policy parameters as required.

Policies in use can only be changed if the Allow Policy Changes if Assigned global parameter value is set.

To delete an inventory policy:

  1. Select the Delete? box to the right of the policies to be deleted.
  2. Select Delete Inventory Policy.

Policies can't be deleted when in use.

Additional information

Policies with a service level Target Basis, must have the Reorder Point Policy value set to Periodic Review.

Service level targets that suggest a negative safety stock, have the safety stock set to zero.