Inventory Management Preferences

Use Lead Time and Safety Stock per Location – Set lead time and safety stock levels for an item at each location. The default value is ‘F’.
Default Lead Time – Enter the default number of days it takes to receive an item after placing an order. The default is 14 days.

NetSuite uses this lead time to auto-calculate the reorder point of an item if you haven't set a lead time on the item record.

If you track multiple vendors for an item, NetSuite combines lead times across all vendors for that item, not for each vendor separately.
Default Safety Stock – The default number of days to keep an item on hand as a buffer to avoid stockouts. The default is 7 days.
- When you use Demand Planning, NetSuite includes the safety stock amount in demand plan calculations.
- When you use Advanced Inventory Management, NetSuite uses this amount to auto-calculate the item's reorder point.
  
  If you enter safety stock in days, NetSuite calculates it as: daily demand × safety stock level in days.
  
  For example, daily demand for item #12345 is five per day. You want to keep on hand the Preferred Stock Level quantity plus 3 days worth of buffer stock. You would enter 3 in the Days field next to Safety Stock Level. NetSuite then calculates replenishment orders to keep at least three days' worth of stock on hand (3 days * 5 items daily = 15 items). On the Order Items page, you should order enough to keep at least 15 extra of item #12345 on hand.
  
  NetSuite also uses this safety stock value when auto-calculating the suggested reorder quantity, if you haven't set a safety stock value on the item record.
Default Preferred Stock Level – Enter the default number of days to want to keep an item on hand. This variable helps balance between running out of stock (and delaying fulfillment) and having too much stock. The default is 30 days.

The amount you enter sets the preferred stock level that shows up by default on new item records.
- When you use Demand Planning, the preferred stock level field is greyed out for items that use the Time Phased replenishment method.
- When you use Advanced Inventory Management, the preferred stock level you set is used to calculate the how many items to order (Order Items page).
  
  Enter the default preferred stock level in days, not units. This is a measure of how many days worth of stock you want when the order is received. NetSuite calculates it as: daily demand × preferred stock level in days.
  
  For example, the daily demand for item #12345 is five per day. You prefer to keep seven days worth on hand in stock. Enter 7 in the Days field next to Default Preferred Stock Level. NetSuite then calculates replenishment orders to keep at least seven days' worth of the item (5 widgets × 7 days = 35 widgets). On the Order Items page, you should order enough to keep at least 35 widgets in stock.
  
  NetSuite also uses this number of days when auto-calculating the preferred stock level, if you haven't set a value on the item record.
Order Analysis Interval – Enter the number of months of history to consider when calculating AIM values. The default value is 6 months.

In Demand Planning, the order analysis interval field is greyed out for item records using the Time Phased replenishment method.

NetSuite uses the order analysis interval when seasonal demand isn't set for an item.

For example, if you enter 6, NetSuite looks at the past 6 months of sales order history.

Note:
If auto-calculation isn't working as expected, you might need to adjust your Order Analysis Interval setting.

For example, an inventory item was sold only one time since 2007, and the last sale was on 12/1/07. If the Order Analysis Interval setting is 30 days, it can't be calculated because the Order Analysis Interval setting only looks back only one month and doesn't see the old sale. You'd need to change the analysis interval to include the date of the last sales order for the calculation to work.

The historical analysis considers only transactions created after you turn on the Multi-Location Inventory feature. If your Order Analysis Interval includes transactions dated prior to using the Multi-Location Inventory feature, NetSuite can't complete the calculations.
Seasonal Analysis Interval – Enter the number of months to consider as a season. This preferences only applies if you use Seasonal Demand on an item, which helps when you expect seasonal fluctuations in demand. The default value is 1 month.

In Demand Planning, the seasonal analysis interval only applies to items that don't use the Time Phased replenishment method.
Estimated Demand Change – Enter the default percentage you expect demand to change. The default value is 0%.

For example, demand is projected at 100 units for July based on last July's sales. However, you know that sales for this item have been trending up for the past two months, and you want calculations to mirror this trend. You can enter a percentage to increase the expected demand. If you expect sales of this item to go up, you can enter a 10% expected demand change to add to previous sales totals.

The amount you enter shows by default on new item records.
- For items using Advanced Inventory Management to calculate demand, this amount is used for calculating the suggested reorder quantity. This is true if there isn't a demand change percentage specified on the item record.
- In Demand Planning, this setting is used only when the forecast method for a plan is set to Seasonal Average.
The expected demand change for the original item is used when you create a demand plan using an alternate source item.
Transactions to Consider – Determine which transactions NetSuite uses to calculate inventory demand:
- Click Orders to include Sales Orders and Work Orders in AIM calculations.
  
  The following aren't included: Planned Work Orders, Pending Approval Sales Orders, Cancelled Sales Orders, and Cancelled Work Orders.
  
  ‘Closed’ status is included. Special Order Sales Orders and Work Orders are included, but Drop Ship Sales Orders aren't, since Drop Ship isn't received into inventory.
- Click Actual Sales to use cash sales, invoices, and assembly builds to calculate demand for setting reorder points and preferred stock levels. In this case, sales orders and work orders aren't used to calculate demand. Only cash sales, the invoices that bill them, and builds that create them are included in demand calculations. If the Assemblies feature is on, then assembly builds are also included.
  
  Note:
  If you use the Cross–Subsidiary Fulfillment feature, for Sales Orders, NetSuite uses the line-level inventory location field, and not the location field. This behavior only matters when this preference is set to Orders.
  
  If this preference is set to Actual Sales, AIM looks at Invoice, Cash Sale, Build, Work Order Issue, and Work Order Completion transactions. There are no transaction status restrictions in this case.
  
  Important:
  With either option, if you use Work-In-Process (WIP), then WIP and Scrap lines for Work Orders are excluded to avoid over-counting quantities on work orders.
Inventory demand calculations consider only transactions that decrease an item's stock. For example, an assembly build increases stock for the assembly item but decreases stock for the assembly item's components. In this case, the demand plan only counts the assembly build for the components, not the assembly item itself.

This setting applies to items using Demand Planning and Advanced Inventory Management to calculate demand.

Note:
If you use both sales orders and standalone cash sales/invoices, you should choose the Actual Sales option.
Day of Week To Perform Calculation – Select which day of the week to run inventory metrics calculations. You can change this selection later if you need to. The default is Sunday at midnight.

This option sets the weekly schedule for AIM calculations. You should set this preference to match your off-peak business days. You can start a calculation at any time from the preferences page by clicking Save, and then Submit & Calculate.

Note:
This preference applies only to items using Advanced Inventory Management to calculate demand.

To run a one-time inventory metrics calculation, from Save, click Submit and Calculate. NetSuite runs the calculation that night, in addition to the regular weekly calculation.

For example, you set Monday for the auto-calculation to run. Choose the Orders for the Transactions to Consider to calculate demand. Then, set an Order Analysis Interval of 6 to include transactions from the past 6 months in the auto-calculation.

With these settings, NetSuite calculates the average unit sold per day for items to auto-calculate. This average unit sold per day number is multiplied by the days settings. Days setting is on the item record, or in inventory management preferences.

X days × Y average units sold per day = Z quantity required.

Note:
If you use the Multi-Location Inventory feature, NetSuite calculates item demand per location.

You can also set item records to auto-calculate by going to Setup > Mass Updates > Mass Updates.

Time of Day to Perform Calculation – Select the time when inventory management calculations run. The default is Sunday at midnight, Pacific time.

This option sets the time when AIM calculations run. You should set this preference to match your off-peak business hours. You can start a calculation at any time from the preferences page by clicking Save, and then Submit & Calculate.

Auto-calculation and Insufficient Data

For items using Advanced Inventory Management to calculate demand, auto-calculated inventory metrics can be inaccurate if your data sample doesn't match the analysis interval. For example, this can occur in these cases:

Your account is new and you haven't entered any sales history data.
You have new item records with no sales history data.
You enabled Multi-Location inventory but don't have sales history data for each location.

In these cases, the auto-calculation uses the full interval only if there are sales for the item before the interval starts. If there are no sales before the start of the interval, the auto-calculation is attempted using half the interval. If there's still not enough data, the reorder point and preferred stock level stay the same. Then, you can enter manual metrics, or the auto-calculations run later when there's enough sales data.

Auto-calculation and Insufficient Data

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