Process Overview

Advanced reordering predicts sales for each inventory item by using either linear regression or cyclical curve fitting statistical methods. Once a trend line is established for future sales, Greentree takes the current inventory holding and moves forward, subtracting expected sales and adding expected deliveries.

The period that the inventory requirements are being predicted for starts at the planned delivery time for the current purchase order to the expected delivery time for the next order. The order cycle-time and the lead time of the delivery method determine these dates.

As sales diminish the inventory holding, if the predicted holding falls below a nominated minimum quantity (which includes backorders), then Greentree suggests an order quantity that are sufficient to restore inventory levels back up to the minimum quantity, and to cover expected sales to the end of the prediction period.

Using statistics, you can calculate a range that you can be 90% confident the sales will be within. When the reorder process runs, you can set a factor that will weight sales up or down from the average, within the 90% confidence interval. This factor is called the Sales Weighting, and can range from 0 to 100. Use this factor to minimise the chance of stock outs (50-100), or can minimise the amount of inventory reordered (0-50).