Policy Assignment Sets

A policy assignment set is a group of policy parameters, default policies, and policy overrides 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 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.

Note: To avoid performance-related issues, limit policy assignment sets to 20 or less for all your replenishment plans.

The policy assignment set consists of the following:

Policy parameters
Default policies
Policy 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. So, 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
Fixed order cycle	The maximum quantity is calculated as specified later in this topic.	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)).
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 x 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 is calculated as discussed in the topic titled How Average Daily Demand Is Calculated in Oracle Replenishment Planning. The safety stock is calculated as discussed in the topic titled How Safety Stock Is Calculated in Oracle Replenishment Planning. 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)).
Periodic automatic replenishment (PAR)	The following is the formula for calculation of the PAR level: (Average Inventory Usage in Time Period + Safety Stock)/Number of Deliveries in Time Period, where Average Inventory Usage in Time Period = Average Daily Demand x PAR Time Period The following is the formula for calculation of the PAR maximum quantity: Average Daily Demand x Maximum Quantity Days of Cover The final values for the PAR level and PAR maximum quantity are rounded to integers. The average daily demand is calculated as discussed in the topic titled How Average Daily Demand Is Calculated in Oracle Replenishment Planning. The safety stock is calculated as discussed in the topic titled How Safety Stock Is Calculated in Oracle Replenishment Planning.	After you run your replenishment plan with the Calculate policy parameters checkbox selected on the Parameters tab in the Run Plan dialog box, you must submit the scheduled process named Publish PAR Policies from the Scheduled Processes work area or Manage Policy Comparison table. If you update your PAR policies in the Manage Policy Comparison table, you must click Actions > Update Policy Measures and then Actions > Publish PAR Policies. After you run the scheduled process, you can see the calculated PAR level and PAR maximum quantity on the Manage Item Subinventories page that's available from the Manage Subinventories page in the Setup and Maintenance work area.
Reorder point (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 x 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 is calculated as discussed in the topic titled How Average Daily Demand Is Calculated in Oracle Replenishment Planning. The safety stock is calculated as discussed in the topic titled How Safety Stock Is Calculated in Oracle Replenishment Planning. The EOQ is calculated as discussed in the topic titled How EOQ Is Calculated in Oracle Replenishment Planning.	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. For this policy type, the EOQ should be correctly calculated.
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 x 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 is calculated as discussed in the topic titled How Average Daily Demand Is Calculated in Oracle Replenishment Planning. The safety stock is calculated as discussed in the topic titled How Safety Stock Is Calculated in Oracle Replenishment Planning. The order quantity is taken for the item-location combination from the Fixed Order Quantity column in the Items table. If this value is unavailable, the default order quantity specified at the segment level in the policy assignment set is used.	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. For this policy type, the fixed order quantity should be correctly defined at the item level.

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 decide 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 EOQ: The minimum quantity is added to the EOQ.
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 in the Items table. If this value is unavailable, the default order quantity specified at the segment level in the policy assignment set is used.

Default Policies

You define these default policies at the segment level:

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

You define these policy overrides at the segment level:

EOQ override
Maximum 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.
Order quantity override
PAR level override
PAR maximum quantity 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.
Safety stock override

Use policy 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:

EOQ override
Fixed order cycle calendar
Maximum 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.
Order quantity override
PAR level override
PAR maximum quantity override
Policy type
Policy UOM
ROP override: If this value is specified, the safety stock isn't calculated, and no value is shown for the safety stock in tables.
Safety stock override

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.

Note: To avoid performance-related issues, limit your policy overrides at the item-location level for a policy assignment set to 2,000 or less. You shouldn't have more than 40,000 policy overrides at the item-location level for all your policy assignment sets.

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:

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