How the Low-Level Code Is Calculated During Multiechelon Replenishment Planning

During multiechelon replenishment planning, the low-level code is used for identifying the bottom-most echelon and upper echelons in your supply chain.

During the bottom-up pass, unconstrained demand is propagated from the bottom-most echelon through the upper echelons to the top-most echelon. During the top-down pass, constrained supply is allocated from the top-most echelon through the lower echelons to the bottom-most echelon. The low-level code is calculated for every item at a location so that all the echelons in the supply chain are identified and processed correctly. The replenishment plan uses sourcing rules for calculating the low-level code.

Consider a supply chain in which item ITM001 is present in locations M0, M1, M2, M3, M4, and M5:

The combinations of the item and the M3, M4, and M5 locations aren't a source for any other location.
Therefore, these item-location combinations get the low-level code of zero.
The combination of the item and the M2 location is the source for the item at the M3, M4, and M5 locations.
Therefore, this item-location combination gets the low-level code of 1.
The combination of the item and the M1 location is the source for the item at the M2 location.
Therefore, this item-location combination gets the low-level code of 2.
The combination of the item and the M0 location is the source for the item at the M1 location.
Therefore, this item-location combination gets the low-level code of 3.

The following figure depicts this supply chain and the computed low-level codes for the item-location combinations:

Figure depicting supply chain and the computed low-level codes

Additional Points About the Low-Level Code

Note these additional points about the low-level code:

The item-location combination with the lowest low-level code in the supply chain gets processed first.
The item-location combination that doesn't have any transfer from a source location in the sourcing rule gets the highest low-level code in the supply chain.
An item-location combination that isn't the source for any other item-location combination needn't always have the low-level code of zero. The assigned low-level code is computed on the basis of the low-level code for the source item-location combination.
For example, if an item at the L1 location is the source for the item at the L2 location, the item at L2 isn't the source for any other item-location combination, and the item at L1 has the low-level code of 2, then the item at L2 will have the low-level code of 1.
If an item-location combination is the source for two other item-location combinations with different low-level codes, then the source item-location combination gets a low-level code that's calculated as follows: 1 + highest low-level code among destination item-location combinations.
For example, if an item at the L1 location is the source for the item at the L2 location with the low-level code of 1 and the item at the L3 location with the low-level code of 2, then the item at L1 will have the low-level code of 3.
The low-level code is used for deciding the sequence for processing the item-location combinations. This process is an internal one, and you only need to ensure that sourcing rules are set correctly.