11 Overview to Item and Quantity Information

This chapter contains these topics:

Section 11.1, "Objectives"Section 11.2, "About Item and Quantity Information"
Section 11.2, "About Item and Quantity Information"

11.1 Objectives

To locate master information about an item
To access both summarized and detailed information about item quantities
To access information about an item's sales performance
To access supply and demand information for an item
To access item ledger information and locate all of the transactions for an item
To understand how, when, and why you create balance forward records
To understand the different types of information in each of the general ledger (G/L) reports

11.2 About Item and Quantity Information

You can accurately plan for future stocking needs by reviewing information that the system provides about both the item and the quantity. For example, you can:

Quickly access information about the items that you stock.
Access summary and detailed information about on-hand, committed, and available items.
Access and monitor supply and demand information to help you plan for future stocking needs.
Access item information about previous sales, current inventory quantities, and future receipts.
Review balance forward records for a specific fiscal year.
Reconcile inventory balances with the G/L and access detailed item transaction information.
Compare your inventory balances at the end of one period with the same period end for the G/L.

To use quantity information to determine your current and future inventory needs, you must understand the following:

Available versus on-hand quantities
The four types of commitments and how the Inventory Management system commits inventory

Complete the following tasks:

Locate item information
Locate quantity information
Review supply and demand information
Review performance information
Work with transaction records

11.2.1 Types of Quantities and Commitments

Quantity	Description
Available quantity	The number of items that you can use based on user defined calculations. You determine how the system calculates item availability by defining the factors that subtract from, or add to, the available quantity of an item. This calculation can include quantities that do not immediately affect on-hand amounts. For example, you can set up the availability calculation to subtract any quantities that are committed to sales or work orders and add any quantities that are on purchase orders or in transit.
On-hand quantity	The number of items that are physically in stock in the primary unit of measure. The following affect the on-hand quantity of items: Variances that are recorded following a physical inventory Daily removals, additions, or transfers of items Shipment confirmations or updated sales information Locations with lots on hold, such as items requiring inspection or placed in quarantine
Available to promise (ATP)	The number of items that are uncommitted (available for sales or distribution) until the next replenishment orders arrive. You can choose whether to use the basic method or the cumulative method to determine ATP. The basic method assumes the following: Customer demand only, such as sales orders Demand for all periods until the next replenishment order arrives, such as purchase orders Complete consumption of existing quantities during the current period, resulting in no carry-over quantities for the next period The cumulative method is a running total that is based on the following: Does not assume consumption within the current period Does not allow a negative ATP within a period, however, does allow a negative cumulative ATP

Quantity

Description

Available quantity

The number of items that you can use based on user defined calculations. You determine how the system calculates item availability by defining the factors that subtract from, or add to, the available quantity of an item. This calculation can include quantities that do not immediately affect on-hand amounts.

For example, you can set up the availability calculation to subtract any quantities that are committed to sales or work orders and add any quantities that are on purchase orders or in transit.

On-hand quantity

The number of items that are physically in stock in the primary unit of measure. The following affect the on-hand quantity of items:

Variances that are recorded following a physical inventory
Daily removals, additions, or transfers of items
Shipment confirmations or updated sales information
Locations with lots on hold, such as items requiring inspection or placed in quarantine

Available to promise (ATP)

The number of items that are uncommitted (available for sales or distribution) until the next replenishment orders arrive.

You can choose whether to use the basic method or the cumulative method to determine ATP.

The basic method assumes the following:

Customer demand only, such as sales orders
Demand for all periods until the next replenishment order arrives, such as purchase orders
Complete consumption of existing quantities during the current period, resulting in no carry-over quantities for the next period

The cumulative method is a running total that is based on the following:

Does not assume consumption within the current period
Does not allow a negative ATP within a period, however, does allow a negative cumulative ATP

After you enter a sales order, the system commits inventory for it. At the time of order entry, you can choose the type of commitment that you want to use.

Commitment	Description
Soft commitment	When you use soft commitments, the system: Does not specify a location from where to remove inventory Uses the primary location as the default location
Hard commitment	When you use hard commitments, the system: Specifies a location from where to remove inventory Note that this occurs most frequently during shipment confirmation, but can occur at any time during the sales order process.
Future commitment	When you use future commitments, the system: Uses a future date that you define for completing a sales order
Other Quantity 1 and 2	When you commit inventory for other quantities, the system: Assigns inventory to different types of sales and procurement documents, such as quote and blanket orders, that do not affect availability

11.2.2 How the System Commits Inventory

The following diagram shows how the Inventory Management system typically commits inventory. You can use additional commitment methods if you are using lot processing. For example, you can define the commitment method by lot number or lot expiration date.

Figure 11-1 How the System Commits Inventory

Description of "Figure 11-1 How the System Commits Inventory"

11.2.3 System Calculations for Supply and Demand Quantities

The system uses supply and demand inclusion rules to calculate the supply and demand quantities for an item.

Inclusion Rule	Description
Sources of supply	Starting with the requested date on purchase orders, the system calculates the supply quantity from the following sources: On-hand inventory - The quantity on hand less hard commitments and quantities on sales and work orders Purchase orders - The quantity entered on purchase orders Manufacturing work orders - The quantity entered on a work order less the quantity shipped
Sources of demand	Starting with the requested date on sales orders, the system calculates the demand quantity from the following sources: Sales orders - The quantity entered on sales orders less the quantity shipped and the quantity canceled Safety stock - Any quantity reserved as protection against fluctuations in demand and supply Work order requirements and parts lists - Starting with the requested date on sales orders, the system calculates the demand quantity for sources such as the quantity required less the quantity issued

Inclusion Rule

Description

Sources of supply

Starting with the requested date on purchase orders, the system calculates the supply quantity from the following sources:

On-hand inventory - The quantity on hand less hard commitments and quantities on sales and work orders
Purchase orders - The quantity entered on purchase orders
Manufacturing work orders - The quantity entered on a work order less the quantity shipped

Sources of demand

Starting with the requested date on sales orders, the system calculates the demand quantity from the following sources:

Sales orders - The quantity entered on sales orders less the quantity shipped and the quantity canceled
Safety stock - Any quantity reserved as protection against fluctuations in demand and supply
Work order requirements and parts lists - Starting with the requested date on sales orders, the system calculates the demand quantity for sources such as the quantity required less the quantity issued

11.2.4 Reconcile Item Balances with the G/L

You can compare your inventory balances to the G/L at the end of a period. Because inventory transactions continue after G/L periods close, the system provides a method for you to reconcile your inventory balances to the G/L for any fiscal period.

You can use this information to create the following:

Summary level reports according to the G/L classification code
Running balance information on Item Ledger (the Cardex)
Balance forward records
Integrity reports