How Min-Max Planning Replenishment Quantities Are Calculated

Settings That Affect Min-Max Planning

The settings that affect min-max planning fall into one of these two categories:

Attributes you define for items, item subinventories, or inventory organizations.
Parameters you specify when printing the Min-Max Planning report

The attributes you define include these min-max planning attributes and order quantity modifier attributes:

Min-max minimum quantity
Min-max maximum quantity
Minimum order quantity
Maximum order quantity
Fixed lot multiple

How Min-Max Planning Is Calculated

The definitions of the variables used in the min-max planning calculations depend upon whether you perform min-max planning at the organization level or at the subinventory level. This table provides the definitions for the variables at each level.

Variable	Organization Level Definition	Subinventory Level Definition
Quantity on Hand	Nettable Quantity on Hand: The sum of quantities on-hand for the item across all the nettable subinventories within your organization. Non-nettable quantities may optionally be included.	The quantity in the subinventory you specify when you submit the Min-Max Planning report.
On Order	The sum of open purchase orders and requisitions.	The sum of open purchase orders, purchase requisitions, and subinventory transfer movement requests scheduled for receipt at the specified subinventory on or before the supply cutoff date. Supply orders referencing a different subinventory, or with no subinventory specified, aren't included.
Open Demand	The sum of reserved and unreserved sales orders, inventory reservations, account issue movement requests. Open Demand also includes work orders in status Completed, On Hold, Released, and Unreleased.	The sum of inventory reservations (including reserved sales orders), account issue movement requests, and subinventory transfer movement requests scheduled to ship from the specified subinventory on or before the demand cutoff date. Inventory reservations referencing a different subinventory, or with no subinventory specified, are not included.
Minimum Quantity	Minimum quantity defined for the applicable item.	Minimum quantity defined for the applicable item subinventory.
Order Quantity Modifiers	Order quantity modifiers defined for the applicable item.	Order quantity modifiers defined for the applicable item subinventory.

Min-Max planning uses these three calculation steps:

Calculate the total available quantity.

The equation used to calculate total available quantity depends upon a combination of the min-max planning level and what you select for the net demand options. This table provides the equation used to calculate total available quantity for each combination of min-max planning level and net demand option.

Min-Max Planning Level	Net Demand Options Selected	Total Available Quantity Equation
Organization	No for all of the net demand options	Nettable Quantity On Hand + On Order
Organization	Yes for any of the net demand options	Nettable Quantity On Hand + On Order - Open Demand
Subinventory	No for all of the net demand options	Quantity On Hand + On Order
Subinventory	Yes for any of the net demand options	Quantity On Hand + On Order - Open Demand

Suggest a new order if: total available quantity < minimum quantity.
Calculate order quantity using the equation: order quantity = maximum quantity - total available quantity, adjusted for order quantity modifiers.

The order quantity modifiers are used to adjust the order quantity as follows:
- If the order quantity is less than the minimum order quantity, the order quantity is revised up to the minimum.
- If the order quantity is greater than the maximum order quantity, the order quantity is revised down to the maximum.
- If revision is necessary for the order quantity to be a multiple of the fixed lot multiple, the order quantity is revised accordingly.

Min-Max Planning Example

This example shows how Oracle Inventory Management uses the item attributes and the Min-Max Planning Report parameters to perform min-max planning to determine whether an order should be placed, and how min-max planning calculates the quantity to order. For this example, assume the item has the following quantity values and item attribute settings:

Nettable quantity on hand = 25
Open supply quantity = 50 with all supply within the supply cutoff date
Open reserved sales order quantity = 90 with all demand within the demand cutoff date
Min-max minimum quantity = 100
Min-max maximum quantity = 500

Using this scenario, when you run the Min-Max Planning report for the organization level with No specified for the Net Reserved Orders parameter, the following calculations are performed:

Total available quantity: 25 + 50 = 75
Below minimum quantity check: 75 < 100

The total available quantity is less than the min-max minimum quantity, so an order is suggested.
Maximum quantity less total available quantity: 500-75 = 425

To bring the quantity available back to the min-max maximum, min-max planning will suggest an order with the quantity to order = 425.

Using the previous scenario, when you run the Min-Max Planning report for the organization level with Yes specified for the Net Reserved Orders parameter, these calculations are performed:

Total available quantity: 25 + 50 - 90 = -15
Below minimum quantity check: -15 < 100

The total available quantity is less than the min-max minimum quantity, so an order is suggested.
Maximum quantity less total available quantity: 500 - (-15) = 515

To bring the quantity available back to the min-max maximum, min-max planning will suggest an order with the quantity to order = 515.