Entering Inventory Management Details
Use the following procedure to enter inventory management details.
To enter item inventory management details:
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If you use Bin Management or Advanced Bin Numbered Inventory Management and want to track item bin locations, check the Use Bins box.
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To use ATP calculations for this item, select a Default ATP Method. For more information, see Available to Promise Methods.
This field appears only on inventory and assembly items.
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To calculate the preferred stock level based on demand for the item, check the Auto–Calculate box.
Enter the preferred stock level in Days. This measures the number of days worth of stock you want to have when the order is received. Preferred stock level is calculated as daily demand multiplied by preferred stock level in days.
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Enter an ATP Lead Time to use in Available to Promise calculations.
ATP lead time is used as a planning horizon for supply and demand in the ship date recommendation calculations. It is also used to provide a ship date on an order based on future supply and demand when no inventory is available.
If you use Multi-Location Inventory, the Locations subtab displays the ATP Lead Time column. You can enter an ATP lead time for each location.
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To populate the Create WO column box by default when this item is selected on a sales order, check the Special Work Order Item box.
Clear this box to clear the Create WO column box default.
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To set work orders to build sub-assemblies for this assembly by default, check the Mark Sub-Assemblies Phantom box .
Clear this box to leave the Mark Sub-Assemblies Phantom box clear on work orders by default.
This field appears only on assembly items.
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To mark the item source on a bill of materials as Phantom by default, check this box.
NetSuite applies item source value to work orders that use this item.
You can override the default amount on the Item Source field on the bill of materials or work order records.
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Enter the item Reorder Multiple quantity you prefer to order each time.
The Order Items page recommends an order quantity for this item that is always a multiple of the number you enter.
For example, when a vendor accepts orders only in multiples of one thousand, NetSuite might prompt you to order 1000 or 2000, but not 1500.
Note:If you use Multiple Units of Measure, the reorder multiple always functions in base units.
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Enter the Work Order Lead Time in days required to build one assembly in the base unit.
This field appears only on assembly items when you use Demand Planning.
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Supply Source – Choose a setting for replenishment of assembly items.
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Select Buy to replenish stock of this item by purchasing this item from a vendor. When you select this option, NetSuite recommends creating purchase orders on supply plans.
Inventory items permit only the Buy option.
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Select Build to process assembly builds to replenish stock. When you select this option, NetSuite recommends creating work orders on supply plans.
For multi-tier assemblies, work orders could be created if Supply Source is set to Build. Additional work orders can be created if a sub-assembly supply source is also set to Build.
This field appears only on assembly items when the Demand Planning feature is enabled. The setting in this field can be changed only when you use the Allow Purchase of Assembly Items preference.
Important:If the start date of a work order is prior to the current date, NetSuite does not use subsequent demand in the sub-assembly tiers.
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Select a Replenishment Method to calculate item replenishment requirements.
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Master Production Scheduling – to plan when and how much of an item will need to be produced.
When you select this option, the following fields are not available:
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Reorder Point
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Safety Stock Level Days
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Seasonal Demand
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Preferred Stock Level Days
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Reorder Multiple
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Material Requirements Planning – to schedule and place orders for items that depend on demand.
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When you select this option, the following fields are not available:
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Reorder Point
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Safety Stock Level Days
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Seasonal Demand
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Preferred Stock Level Days
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Reorder Multiple
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Reorder Point – to use Advanced Inventory Management settings for demand calculations instead of using Demand Planning.
Orders are created based on replenishment reminders generated from the Order Items, Replenish Items, and Mass Create Work Orders pages.
When you select this option, the following fields are not available:
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Alternate Source Item
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Planning item Category
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Lot Sizing Method
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Fixed Lot Size
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Supply Type
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Demand Source
For more information, see Advanced Inventory Management.
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Time Phased – to create orders based on item demand plans instead of the Advanced Inventory Management settings.
When you select this option, the following fields are not available:
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Seasonal Demand
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Build Point
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Reorder Point
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Reorder Multiple
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Preferred Stock Level
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PLanning Item CAtegory
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Safety Stock Days
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Select an Alternate Source Item to examine the historical sales of an item other than the one on the current record. When this field is left blank, the source for historical data is the original item.
For example, you are setting up a road bicycle item for demand planning. It does not have an extensive sales history, however, you can choose mountain bicycles as an alternate source for historical data. When demand calculations need to be made for road bicycles, NetSuite uses the mountain bicycle history for the calculations.
Note:You can select only an item that is of the same item type to be an alternate source. For example, if the original item is an inventory item, the alternate source item must also be an inventory item.
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Lead Time – Lead time is the average number of days between ordering this item from the vendor and receiving it.
This setting is used for both Advanced Inventory Management and Demand Planning. The information below applies to items that use Advanced Inventory Management. For information about Demand Planning, see Demand Planning.
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Auto-Calculating – Check the Auto-Calculate box to have NetSuite calculate the lead time based on the most recent order history of this item. The calculation takes the number of days between the order entry and receipt on the three most recent purchase orders, and then divides by three.
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If there are multiple receipts for the item against the same purchase order, the calculation changes. It takes the difference between the purchase order and the last receipt (the receipt that fully receives the order).
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Lead time calculation is not weighted by number of units received.
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More recent purchase orders without receipts are ignored.
For example, NetSuite examines the last three purchase orders and receipts for Item #12345:
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Receipt entered 1/15/2021
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Receipt entered 1/20/2021
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Receipt entered 2/10/2021
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Receipt entered 3/17/2021
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Receipt entered 3/21/2021
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PO #456 – 14 days
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PO #567 – 5 days
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PO #789 – 9 days
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14 + 5 + 9 = 28
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28 / 3 = 9.3
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Manual – Clear the Auto-Calculate box to manually enter a lead time value in days. If the box is clear and no value is entered, NetSuite uses the default value from the Set Up Inventory Management page.
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Reorder Point represents the quantity level at which you need to place an order to replenish stock, or build more of this item. You can calculate the reorder point of items manually or let NetSuite calculate them automatically.
This field is available only when you use Advanced Inventory Management. It is not available for items that use Demand Planning.
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Check the Auto-Calculating box to calculate the reorder point based on demand for the item over time. The reorder point depends on the safety stock definition and is calculated as follows:
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Without safety stock defined:
Reorder point = (average lead time days x demand)
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With safety stock defined in days:
Reorder point = [(average lead time days + safety stock days) x demand]
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With safety stock quantity defined:
Reorder point = [(average lead time days x demand) + safety stock quantity)
(Safety Stock Level and Seasonal Demand follow.)
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Clear the Auto-Calculating box to manually enter the point at which to reorder or build more of this item.
To determine the reorder point, consider the lead time for the item and how many you need to stock between placing and receiving the order.
For example, item #12345 has a three-week lead time and you sell an average of 25 each week. Your reorder point quantity should be at least 75. When you reach a stock level of 75, NetSuite reminds you to place an order. Then, you have enough stock to fulfill sales until the order is received.
To have NetSuite remind you to place an order, go to Home > Set Preferences. Check the Inventory Level Warnings box and then save.
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Preferred Stock Level is the optimum quantity to maintain in stock of an item. The ideal quantity is the amount you need to fulfill orders in a timely manner without running out or overstocking.
This field is available only when you use Advanced Inventory Management. It is not available for items that use Demand Planning.
NetSuite uses the quantity you enter to determine your replenishment needs on the Order Items page. It is the quantity you want to have in stock after an order is placed. The preferred stock level you set is used to calculate the quantity of items to be ordered on the Order Items page.
If no preferred stock level is identified, the default preferred stock level is used from the Set Up Inventory Management page. For more information, see Setting Up Advanced Inventory Management.
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Check the Auto-Calculating box to calculate the preferred stock level based on demand for the item.
When you choose to auto-calculate, you must enter the preferred stock level in days, not units. This is a measure of how many days worth of stock you want to have when the order is received. NetSuite calculates the preferred stock level as daily demand x preferred stock level in days.
For example, daily demand for item #12345 is five per day. You want to have seven days worth in stock on hand when the order is received. Enter 7 in the Days field next to Preferred Stock Level. NetSuite calculates replenishment orders to have a minimum of seven days worth of stock when the order is received. Five widgets daily x seven days = 35 widgets. On the Order Items page, order a quantity to have a minimum of 35 widgets in stock after the order is received.
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Clear the Auto-Calculating box to manually enter the preferred stock quantity.
If you stock too few of an item, you might run out frequently, which affects customer service adversely. If you stock too many, you have money tied up in stock that sits on your shelves.
From the previous example, you need at least 35 item #12345 in stock, however, 40 in stock may be ideal.
If you use Multi-Location Inventory, the field to enter units for the Preferred Stock Level appears in the Location list. If you do not use Multi-Location Inventory, the field to enter units for the Preferred Stock Level appears next to the Auto-Calculate box.
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Safety Stock Level represents the amount of stock to keep on hand to account for demand variations so that you do not run out. It is a buffer amount of an item to keep in stock at all times.
This option is used for both Advanced Inventory Management and Demand Planning. For demand planning items, safety stock can be entered only as a quantity. The information below applies to items that use Advanced Inventory Management. For more information about Demand Planning, see Demand Planning.
The safety stock amount you enter is used to auto-calculate the reorder point of an item. Safety stock can be a quantity or a number of days.
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To define safety stock as a quantity, enter a value.
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To define safety stock as a number of days, enter a value in the field next to Days.
When the safety stock is entered in days, the safety stock level is calculated as:
(daily demand x 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 additional buffer stock. Enter 3 in the Days field next to Safety Stock Level. NetSuite calculates replenishment orders to keep three days worth of additional buffer. Three days x five items daily = 15 items. On the Order Items page, order a quantity to keep a minimum of 15 extra of item #12345 on hand.
NetSuite uses the safety stock level to calculate the reorder point. Then, the reorder point determines what appears on the Order Items page for replenishment.
If no safety stock value is entered, NetSuite uses the default value from the Set Up Inventory Management page.
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In the Lot Sizing Method list, select one of the following options:
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Lot For Lot – This selection means orders are suggested for procurement based on the exact projections for that day. The suggested order quantity might vary from day to day depending on demand calculations.
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Fixed Lot Size – This selection means orders are suggested for procurement based on a fixed amount or a multiple of the fixed amount.
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Periods of Supply – This option generates aggregated purchase orders or work orders based on demand requirements extended over a designated period. For example, weekly or monthly.
For example, you do not create multiple purchase orders for each instance of demand. Instead, you consolidate into one order created from the demand planning engine for all items required within the next two weeks. When you send a consolidated purchase order to a vendor, the vendor can ship all items at one time. Fewer shipments may reduce shipping costs.
For more information, see Demand Planning on Item Records.
If you use Multi-Location inventory, this field is on the Locations subtab.
The Lot Sizing Method field is available only when you use Demand Planning.
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The Supply Type field shows the method by which more stock is procured, either Purchase or Assembly. On assembly items, if you use the Allow Purchase of Assembly Items preference, you can choose whether to build additional supply or purchase it.
For more information about this preference, see Setting Up Demand Planning.
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The Demand Time Fence field defaults to the number entered in the Default Demand Time Fence field. Verify the default or enter a number between zero and 365 to determine the demand time fence for this item.
If you use Multi-Location Inventory, this field appears on the Locations subtab. Otherwise, these fields appear in the header of item records.
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Planning Time Fence – This field defaults to the number entered in the Default Planning Time Fence field. Verify the default or enter a number between zero and 365 to determine the planning time fence for this item.
If the item record does not identify a planning time fence, NetSuite uses the default planning time fence value identified in the inventory preference setting. For more information about this preference, see Setting Time Fence Preferences. If this field is blank on both the item record and the Inventory Management Preferences page, NetSuite does not use a planning time fence.
If you use Multi-Location Inventory, this field appears on the Locations subtab.
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Check the Seasonal Demand box to define how NetSuite analyzes customer demand for this item. Customer demand for an item is used to auto-calculate reorder points and preferred stock levels. An item's demand rate is calculated as the average sales quantity per day.
This field is available only when you use Advanced Inventory Management. It is not available for items that use Demand Planning.
Note:For demand calculations, sales quantities are derived from approved sales orders and do not source fulfillment or invoice information. Sales quantities do include special order items.
You can choose to make calculations based on historical demand or seasonal demand.
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Historical Demand – Clear the Seasonal Demand box to calculate the demand as average sales per day over a specific period. When this box is clear, NetSuite calculates demand without regard for seasonal fluctuations.
To set the number of months between analysis to evaluate sales orders and calculate item demand, enter an interval in the Order Analysis Interval field. Go to Setup > Accounting > Preferences > Inventory Management Preferences..
For example, you have set the Order Analysis Interval at 6 months.
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3/05 – 60 units
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4/05 – 54 units
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5/05 – 54 units
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6/05 – 62 units
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7/05 – 66 units
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8/05 – 68 units
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Monthly average = 60+54+54+62+66+68 / 6
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Demand rate = 60.67 / 30
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Seasonal Demand – Check the Seasonal Demand box to calculate the reorder quantity for this item based on inventory demand changes through the year. Then, auto-calculated reorder quantities are higher or lower based on changes in demand for an item at different times throughout the year.
Use seasonal demand to define a period, or season, and NetSuite estimates future period sales based on prior-period sales data.
To set the number of months between analysis to evaluate sales orders and calculate item demand, enter a value in the Seasonal Analysis Interval field. Go to Setup > Accounting > Preferences > Inventory Management Preferences..
For example:
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10/04 – 72 units
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11/04 – 83 units
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12/04 – 94 units
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Monthly average = 72 + 83 + 94 / 3
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Demand rate = 83 / 30
The demand rate does not appear on the item record. It is only used for reorder quantity recalculations.
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In the Expected Demand Change field, enter a percentage to augment the expected demand change.
For example, demand is projected at 100 units for this upcoming July based on sales last July. However, sales for this item have been trending upwards the last two months, and you want calculations to mirror this trend. You can enter a percentage to bump up expected demand beyond the calculated amount.
If no expected demand change percentage is entered, NetSuite uses the default value from the Set Up Inventory Management page.
This setting is used for Advanced Inventory Management and Demand Planning items only when the forecast method for a plan is set to Seasonal Average.
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In the Transfer Price field, enter a declared value for the item. The value entered in this field defaults to show in the Transfer Price field on transfer order forms. This field defaults to a value of zero.
The use of the value entered in this field depends on your setting for the Use Item Cost as Transfer Cost preference.
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When you use this preference, the transfer price is not considered for posting cost accounting of line items. In the Transfer Price field, enter a declared value for the item to be used for shipping purposes only.
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When you dot use this preference, the transfer price is considered during the posting of cost accounting lines. Items without a transfer price set on the transfer order use a zero value for cost accounting calculations when the item is received.
For more information about the Use Item Cost as Transfer Cost preference, see Transfer Order Preferences.
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Check the Round Up Quantity as Component box to enable NetSuite to round up the quantity consumed for this item.
Clear this box if you do not want NetSuite to round up the quantity consumed for this item.
If you use the component yield preference, depending on your settings, the component yield calculation may result in a fractional quantity. You can use this setting to ensure the component quantity automatically rounds up in the units specified in the work order.
For example, you have an assembly that requires two units of Component A. The component yield is 99%. To build five of these assemblies requires 10.1 units of Component A. Because you can consume components only in whole numbers, you cannot consume 10.1 units. Therefore, you need to round up to the next highest unit.
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In the Supply Chain Future Horizon field, enter the number of days ahead you want to be included in the snapshot. This includes future orders beyond the snapshot generated for this item.
For example, when you select 30 in this field, open orders that are past due by 30 days are included.
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The default for this field is 30 days.
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The maximum you can enter in this field is 365 days.
This field is available only on inventory items and assembly/bill of materials items when you use the Supply Chain Control Tower feature. For more information, see Supply Chain Control Tower.
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