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The obsolescence horizon is defined as the period between Plan Current and End of
Obsolescence Date.
Obsolete On-Hand
It is the difference between On-Hand Inventory and Demand within Obsolescence
Horizon as given below:
Max{On-Hand - Demand within Obsolescence Horizon, 0}
Obsolete On-Hand Value
It is computed as:
Obsolete On-Hand * Item Standard Cost
Obsolete On-Order
It is the difference between On-Order Inventory and Demand within Obsolescence
Horizon as given below:
Max{On-Order - Demand within Obsolescence Horizon, 0}
Obsolete On-Order Value
It is computed as:
Obsolete On-Order * Item Standard Cost
Total Obsolescence
It is sum of obsolescence computed from On-Hand and On-Order.
Total Obsolescence Value
It is the obsolescence quantity computed in equivalent currency as given below:
Total Obsolete * Item Standard Cost
Inventory Analysis Facts
Achieved Service Level
It is a measure of achieved inventory performance. It is specified as a percentage. This
is computed by the engine as:
(Total Demand Quantity of Item Satisfied by Due Date / Total Demand Quantity of
Item) * 100
Target Service Level
It is a measure of Targeted inventory performance. It is specified as a percentage. This
is an input parameter that may be specified at various levels in the following order of
specificity:
a. Plan is the default level
b. Organization
c. Customer
d. Customer - Site
e. Demand Class
f. Organization - Demand Class
g. Category
h. Category - Demand Class
i. Item - Demand Class
j. Item - Organization
k. Item - Organization - Demand Class
Carrying Cost
It is the cost of keeping and maintaining inventory in storage. This is computed in the
engine as:
Average Inventory Over Desired Period * Carrying Cost
Manufacturing Cost
It is the cost of a product determined by the sum of the cost of all the resources that
went into making it including labor, capital, space and taxation.
Purchasing Cost
It is the cost of purchasing a product computed based on product supply and standard
product cost. It is computed in the engine as:
Sum of {Standard Cost * Supply Quantity} for all Items
Transportation Cost
It is the cost of moving inventory from organization to another. This cost depends on
mode, quantity, weight, volume etc.
Total Supply Chain Cost
It is the sum of carrying, manufacturing, purchasing and transportation costs.
Revenue
It is the total revenue from expected sales, computed as:
Sum of Independent Demand * (Item List Price - Discount)
Gross Margin
It is the profit margin computed as the difference between Revenue and Total Supply
Chain Cost.
Gross Margin (as Percent)
It is the profit margin computed as a percentage:
{(Revenue - Total Supply Chain Cost) / Revenue} * 100
Inventory Budget