Order quantity planning

Order quantity planning is the entirety of all planning activities within the Procurement programming to determine the quantities of goods that are to be ordered at a certain point in time. The period requirement determined in the requirements planning is broken down into partial quantities to be ordered. Here an optimization problem has to be solved because an order triggers two opposing cost effects.
The larger the order quantity, the higher the storage costs. A lower number of items per order increases the order frequency and consequently the total of the order costs.

For simple models, the optimal order quantity determined by minimizing the sum of storage costs and costs for the order. You get the classic order quantity formula:

optimal order quantity = 1200 * annual requirement * order costs / cost price * storage cost rate

It applies under the premise of a relatively continuous and even inventory outflow or a requirement that occurs in small jumps but always constant quantities during the planning period. With fluctuating demand, you have to calculate optimal dynamic orders. They can be determined with the help of heuristic methods (eg sliding order quantity) or optimization methods of dynamic programming. In extended models, discounts, discounts and other price reductions can also be taken into account.

If a requirement that has arisen cannot or can only be partially met, a so-called shortfall occurs. If the demand for goods cannot be met because the delivery time has been exceeded, one speaks of a delayed quantity. If the delivery and consequently the production fail completely, it is a loss of quantity. Safety stocks (inventory planning) should help avoid shortages.

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