How the Excess Inventory and Inventory Shortage Are Calculated
This topic explains how the excess inventory or inventory shortage is calculated for an item-location combination in a cluster of a replenishment plan.
Settings That Affect the Calculation of the Excess Inventory and Inventory Shortage
The following affect the calculation of the excess inventory or inventory shortage for the item-location combination:
-
The sum of the preprocessing, processing, and postprocessing lead times specified for the item-location combination in the Items table.
-
The values in the Lead Time Multiplier for Excess Window, Lead Time Multiplier for Shortage Window, and Reserved Safety Stock Percentage columns on the Manage Planning Clusters page for the cluster that contains the item-location combination.
-
The values of the Projected Inventory, Safety Stock, and Reserved Safety Stock measures for the item-location combination.
-
The selection of the Include safety stock in shortage calculation check box on the Inventory Rebalancing tab on the Plan Options page for the replenishment plan.
How the Excess Inventory and Inventory Shortage Are Calculated
This table explains the calculations related to the excess inventory or inventory shortage for the item-location combination:
|
Value for the Item-Location Combination |
Calculation |
|---|---|
|
Window for computing the excess inventory |
The value in the Excess Computation Window measure is taken. The day on which the inventory rebalancing process is run is added to this value. Only the working days in the calendar for the organization (location) are considered for this window's calculation. For example, if the value of the Excess Computation Window measure is 3 days, and the plan is run on Day 1, the excess computation window is up to Day 4. |
|
Window for computing the inventory shortage |
The value in the Shortage Computation Window measure is taken. The day on which the inventory rebalancing process is run is added to this window. Only the working days in the calendar for the organization (location) are considered for this window's calculation. For example, if the value of the Shortage Computation Window measure is 2 days, and the plan is run on Day 1, the shortage computation window is up to Day 3. |
|
Initial Excess for Rebalancing measure |
(lowest value of Projected Inventory measure within the excess computation window) - (highest value of Reserved Safety Stock measure within the excess computation window) - 1 If the value of the calculation is greater than zero, the value is the excess inventory and is stored in the Initial Excess for Rebalancing measure. |
|
Initial Shortage for Rebalancing measure |
At the end of the shortage computation window, the following are done:
|
After the total lead time is multiplied by the multipliers for the excess and shortage computation windows, the resulting values are rounded off as follows:
-
Standard logic for rounding is applied when the resulting value is greater than one.
-
When the resulting value is less than one, the value is rounded off to one.
Examples for Determination of the Excess and Shortage Computation Windows
This table provides examples for determining the excess and shortage computation windows for the item-location combination:
|
Total Lead Time |
Lead Time Multiplier for Excess Window |
Excess Computation Window (Before Rounding) |
Excess Computation Window (After Rounding) |
Lead Time Multiplier for Shortage Window |
Shortage Computation Window (Before Rounding) |
Shortage Computation Window (After Rounding) |
|---|---|---|---|---|---|---|
|
4 |
3 |
12 |
12 |
2 |
8 |
8 |
|
4 |
2.5 |
10 |
10 |
1.5 |
6 |
6 |
|
4 |
2.6 |
10.4 |
10 |
1.6 |
6.4 |
6 |
|
4 |
2.72 |
10.88 |
11 |
1.72 |
6.88 |
7 |
|
4 |
0.5 |
2 |
2 |
0.5 |
2 |
2 |
|
4 |
0.21 |
0.84 |
1 |
0.1 |
0.4 |
1 |
|
4 |
0.1 |
0.4 |
1 |
0.01 |
0.04 |
1 |
Example 1 for Determination of the Excess Inventory and Inventory Shortage
Note the following about this example:
-
The value of the Excess Computation Window measure is 2 days.
Therefore, the Projected Inventory measure is calculated for 3 days.
-
The value of the Shortage Computation Window measure is 1 day.
Therefore, the shortage is calculated for 2 days.
-
The value of the Safety Stock measure is 10.
-
The value of the Reserved Safety Stock measure is zero.
-
The Include safety stock in shortage calculation check box isn't selected on the Inventory Rebalancing tab.
This table provides inputs for calculating the excess inventory and inventory shortage:
|
|
Day 1 |
Day 2 |
Day 3 |
Day 4 |
Day 5 |
Day 6 |
|---|---|---|---|---|---|---|
|
Sum of demands (Not a measure) |
10 |
10 |
10 |
10 |
10 |
10 |
|
Sum of supplies (Not a measure) |
100 |
0 |
0 |
0 |
0 |
0 |
|
Projected Inventory measure |
90 |
80 |
70 |
Not applicable |
Not applicable |
Not applicable |
The excess inventory is 69 (70 - 1). Therefore, the value of the Initial Excess for Rebalancing measure for the item-location combination is 69.
On Day 2, the value of the Projected Inventory measure is 80, which is more than zero. Therefore, there's no inventory shortage.
Example 2 for Determination of the Excess Inventory and Inventory Shortage
Note the following about this example:
-
The value of the Excess Computation Window measure is 2 days.
Therefore, the Projected Inventory measure is calculated for 3 days.
-
The value of the Shortage Computation Window measure is 1 day.
Therefore, the shortage is calculated for 2 days.
-
The value of the Safety Stock measure is 10.
-
The value of the Reserved Safety Stock measure is zero.
-
The Include safety stock in shortage calculation check box isn't selected on the Inventory Rebalancing tab.
This table provides inputs for calculating the excess inventory and inventory shortage:
|
|
Day 1 |
Day 2 |
Day 3 |
Day 4 |
Day 5 |
Day 6 |
|---|---|---|---|---|---|---|
|
Sum of demands (Not a measure) |
10 |
10 |
10 |
10 |
10 |
10 |
|
Sum of supplies (Not a measure) |
30 |
0 |
0 |
0 |
0 |
0 |
|
Projected Inventory measure |
20 |
10 |
0 |
Not applicable |
Not applicable |
Not applicable |
The excess inventory is less than zero (0 - 1). Therefore, there's no excess inventory.
On Day 2, the value of the Projected Inventory measure is 10, which is more than zero. Therefore, there's no inventory shortage.
The item-location combination has no excess inventory or inventory shortage and isn't included in the inventory rebalancing process.
Example 3 for Determination of the Excess Inventory and Inventory Shortage
Note the following about this example:
-
The value of the Excess Computation Window measure is 2 days.
Therefore, the Projected Inventory measure is calculated for 3 days.
-
The value of the Shortage Computation Window measure is 1 day.
Therefore, the shortage is calculated for 2 days.
-
The value of the Safety Stock measure is 10.
-
The value of the Reserved Safety Stock measure is zero.
-
The Include safety stock in shortage calculation check box isn't selected on the Inventory Rebalancing tab.
This table provides inputs for calculating the excess inventory and inventory shortage:
|
|
Day 1 |
Day 2 |
Day 3 |
Day 4 |
Day 5 |
Day 6 |
|---|---|---|---|---|---|---|
|
Sum of demands (Not a measure) |
10 |
10 |
10 |
10 |
10 |
10 |
|
Sum of supplies (Not a measure) |
10 |
0 |
0 |
0 |
0 |
0 |
|
Projected Inventory measure |
0 |
-10 |
-20 |
Not applicable |
Not applicable |
Not applicable |
The excess inventory is less than zero (-20 - 1). Therefore, there's no excess inventory.
On Day 2, the value of the Projected Inventory measure is -10, which is less than zero. Therefore, the value of the Initial Shortage for Rebalancing measure for the item-location combination is 10.
Example 4 for Determination of the Excess Inventory and Inventory Shortage
Note the following about this example:
-
The value of the Excess Computation Window measure is 2 days.
Therefore, the Projected Inventory measure is calculated for 3 days.
-
The value of the Shortage Computation Window measure is 1 day.
Therefore, the shortage is calculated for 2 days.
-
The value of the Safety Stock measure is 10.
-
The value of the Reserved Safety Stock measure is zero.
-
The Include safety stock in shortage calculation check box is selected on the Inventory Rebalancing tab.
This table provides inputs for calculating the excess inventory and inventory shortage:
|
|
Day 1 |
Day 2 |
Day 3 |
Day 4 |
Day 5 |
Day 6 |
|---|---|---|---|---|---|---|
|
Sum of demands (Not a measure) |
10 |
10 |
10 |
10 |
10 |
10 |
|
Sum of supplies (Not a measure) |
0 |
0 |
50 |
0 |
0 |
0 |
|
Projected Inventory measure |
-10 |
-20 |
20 |
Not applicable |
Not applicable |
Not applicable |
The excess inventory is 19 (20 - 1).
On Day 2, the value of the Projected Inventory measure is -20, and the inventory shortage is -30 (-20 - the safety stock of 10), which is less than zero. Therefore, the value of the Initial Shortage for Rebalancing measure for the item-location combination is 30.
The item-location combination has both excess inventory and an inventory shortage and is identified as having an inventory shortage.
Example 5 for Determination of the Excess Inventory and Inventory Shortage
Note the following about this example:
-
The value of the Excess Computation Window measure is 2 days.
Therefore, the Projected Inventory measure is calculated for 3 days.
-
The value of the Shortage Computation Window measure is 2 days.
Therefore, the shortage is calculated for 3 days.
-
The value of the Safety Stock measure is 80.
-
The value of the Reserved Safety Stock measure is zero.
-
The Include safety stock in shortage calculation check box is selected on the Inventory Rebalancing tab.
This table provides inputs for calculating the excess inventory and inventory shortage:
|
|
Day 1 |
Day 2 |
Day 3 |
Day 4 |
Day 5 |
Day 6 |
|---|---|---|---|---|---|---|
|
Sum of demands (Not a measure) |
10 |
10 |
10 |
10 |
10 |
10 |
|
Sum of supplies (Not a measure) |
100 |
0 |
0 |
0 |
0 |
0 |
|
Projected Inventory measure |
90 |
80 |
70 |
Not applicable |
Not applicable |
Not applicable |
The excess inventory is 69 (70 - 1).
On Day 3, the value of the Projected Inventory measure is 70, and the inventory shortage is -10 (70 - the safety stock of 80), which is less than zero. Therefore, the value of the Initial Shortage for Rebalancing measure for the item-location combination is 10.
The item-location combination has both excess inventory and an inventory shortage and is identified as having an inventory shortage.