Policy Assignment Sets

A policy assignment set is a group of policy parameters that are defined for each segment of a segment group.

Policies are calculated for item-location combinations on the basis of these policy parameters. The policy assignment set can also contain policy overrides for segments and item-location combinations.

The policy assignment set is attached to a segment group. You can define multiple policy assignment sets for the segment group. However, you can specify only one policy assignment set for the segment group on the Scope tab on the Plan Options page in a replenishment plan.

The policy assignment set consists of the following:

• Policy parameters

• Default policy parameters

• Policy parameter overrides

• Item-location level policy overrides

Note: For end item substitution and supersession chains, the start and end dates of item revisions aren't considered during policy computation. Consequently, policies are calculated even for time buckets for which the item revisions aren't active.

Policy Parameters

You define policy parameters at the segment level.

This table lists the policy types that you can specify:

Policy Type	Method for Calculation of Quantities	How the Policy Type Is Used
Min-max planning	The following is the formula for calculation of the minimum quantity: Demand During Lead Time + Safety Stock, where Demand During Lead Time = Total Lead Time * Average Daily Demand and Total Lead Time = Preprocessing Lead Time + Processing Lead Time + Postprocessing Lead Time + Transit Time for a buy order or Preprocessing Lead Time + Postprocessing Lead Time + Transit Time for a transfer order The safety stock and average daily demand are calculated as discussed later in this guide. The maximum quantity is calculated as specified later in this topic.	When the Beginning Inventory Position measure (Projected Available Balance + On Order measures) equals or falls below the minimum quantity, a replenishment order is triggered. The quantity of the replenishment order is what's required to bring the inventory up to the maximum quantity (provided by Maximum Quantity - (Projected Available Balance + On Order)).
Fixed order cycle	The maximum quantity is calculated as specified later in this topic.	The replenishment orders are placed on only those days on which suppliers can take orders, according to the associated fixed order cycle calendar. When the Beginning Inventory Position measure (Projected Available Balance + On Order measures) falls below the maximum quantity, a replenishment order is triggered. The quantity of the replenishment order is what's required to bring the inventory up to the maximum quantity (provided by Maximum Quantity - (Projected Available Balance + On Order)).
Reorder point (ROP) and order quantity	The following is the formula for calculation of the ROP: Demand During Lead Time + Safety Stock, where Demand During Lead Time = Total Lead Time * Average Daily Demand and Total Lead Time = Preprocessing Lead Time + Processing Lead Time + Postprocessing Lead Time + Transit Time for a buy order or Preprocessing Lead Time + Postprocessing Lead Time + Transit Time for a transfer order The average daily demand and safety stock are calculated as discussed later in this guide. The order quantity is taken for the item-location combination from the Fixed Order Quantity column of the Items table. If this value is unavailable, the default order quantity specified at the segment level in the policy assignment set is used. Therefore, for this policy type, the fixed order quantity should be correctly defined at the item level.	When the Beginning Inventory Position measure (Projected Available Balance + On Order measures) equals or falls below the ROP, a replenishment order is triggered. The quantity of the replenishment order is the order quantity. If the fixed order quantity isn't defined in the Items table or the default order quantity isn't defined at the segment level in the policy assignment set, replenishment orders are created to bring the inventory to the ROP level. If the inventory is zero, no replenishments are created.
ROP and economic order quantity (EOQ)	The following is the formula for calculation of the ROP: Demand During Lead Time + Safety Stock, where Demand During Lead Time = Total Lead Time * Average Daily Demand and Total Lead Time = Preprocessing Lead Time + Processing Lead Time + Postprocessing Lead Time + Transit Time for a buy order or Preprocessing Lead Time + Postprocessing Lead Time + Transit Time for a transfer order The average daily demand, safety stock, and EOQ are calculated as discussed later in this guide. Therefore, for this policy type, the EOQ should be correctly calculated.	When the Beginning Inventory Position measure (Projected Available Balance + On Order measures) equals or falls below the ROP, a replenishment order is triggered. The quantity of the replenishment order is the EOQ. If the EOQ can't be calculated at the item-location level or the default EOQ isn't defined at the segment level in the policy assignment set, replenishment orders are created to bring the inventory to the ROP level. If the inventory is zero, no replenishments are created.

You specify whether you want to calculate safety stock on the basis of the days of cover or service level.

By specifying Units as the unit of measure (UOM), you ensure that the policies are static. By specifying Days as the UOM, you ensure that the policies are time-phased.

You determine whether the average daily demand should be calculated on the basis of the forecast or history.

You calculate the maximum quantity on the basis of these methods:

• Days of cover: The average daily demand is multiplied by the maximum quantity days of cover specified in the policy assignment set.

• Minimum plus order quantity: The minimum quantity is added to the order quantity, which is taken for an item-location combination from the Fixed Order Quantity column of the Items table. If this value is unavailable, the default order quantity specified at the segment level in the policy assignment set is used.

• Minimum plus EOQ: The minimum quantity is added to the EOQ.

Default Policy Parameters

You define these default policy parameters at the segment level:

• Default daily demand: This value is used when forecast or history data is unavailable at the item-location level for the calculation of the average daily demand.

• Default order quantity

• Default EOQ: If you specify this default, the default standard cost, default carrying cost percentage, and default ordering cost can't be specified.

• Default standard cost

• Default carrying cost percentage

• Default ordering cost

The default order quantity, default standard cost, default carrying cost percentage, and default ordering cost are used when the corresponding values are unavailable for the item-location combination in the Items table.

Policy Parameter Overrides

You define these policy parameter overrides at the segment level:

• Safety stock override

• Order quantity override

• Minimum override: If this value is specified, the safety stock isn't calculated, and no value is shown for the safety stock in tables.

• EOQ override

• Maximum override

• ROP override: If this value is specified, the safety stock isn't calculated, and no value is shown for the safety stock in tables.

Use policy parameter overrides when all item-location combinations in a segment must have the same policy values. When these overrides are specified, policies aren't calculated for the item-location combinations of the segment.

Item-Location Level Policy Overrides

You define overrides at the level of individual item-location combinations, and these settings take precedence over those for the segments to which the item-location combinations belong:

• Policy type

• Policy UOM

• Safety stock override

• Minimum override: If this value is specified, the safety stock isn't calculated, and no value is shown for the safety stock in tables.

• Maximum override

• ROP override: If this value is specified, the safety stock isn't calculated, and no value is shown for the safety stock in tables.

• Order quantity override

• EOQ override

• Fixed order cycle calendar

Use these policy overrides when you know what values you need for item-location combinations in your business, and you want to generate replenishment orders on the basis of these values. When these overrides are specified, inventory policies aren't calculated for the corresponding item-location combinations.

Hierarchy for Reading Policy Overrides and Item Attributes

The following hierarchy explains how policy overrides and item attributes are read during the policy calculation process:

1. If policy overrides are specified for item-location combinations, these values are used as the policies, and policies aren't calculated for these item-location combinations.

2. If policy overrides are specified for segments, these values are used as the policies for all the item-location combinations in the segments, and policies aren't calculated for these item-location combinations.

3. If a simulation set is assigned to the replenishment plan to which the policy assignment set is attached, the item attributes for item-location combinations are taken from the simulation set.

4. If values are unavailable in the simulation set, the collected item attributes are taken.

5. If item attributes are unavailable in the Items table, the default values specified at the segment level in the policy assignment set are used.