4Inventory Replenishment

This chapter contains the following:

Min-Max Planning

Use min-max planning to maintain inventory levels for all of your items or for selected items. Min-max planning requires specification of minimum quantity and maximum quantity inventory levels for your items. When you print the Min-Max Planning report, the inventory level for an item, on-hand quantities plus on-order quantities, is considered. If the inventory level is below the minimum quantity defined for the item, min-max planning suggests a new purchase requisition or movement request to bring the inventory level back up to the maximum quantity. You perform min-max planning at the inventory organization level or at the subinventory level.

You perform the following actions for min-max planning:

  • Define min-max planning attributes when setting up items, item subinventories, or inventory organizations.

  • Print the Min-Max Planning report.

Note: The min-max planning calculations exclude any items and item subinventories configured with the Supplier Managed inventory planning method. See the Oracle SCM Cloud: Using Supply Chain Collaboration guide for more information.

Define Min-Max Planning Attributes

To use min-max planning you set the attributes used by min-max planning. The following attributes are used by min-max planning calculations:

  • Min-max minimum quantity

  • Min-max maximum quantity

  • Fixed lot multiple

  • Minimum order quantity

  • Maximum order quantity

  • Round reorder quantity

To use min-max planning at the organization level, you set the attributes used by min-max planning when you manage items. First, you set the Inventory Planning Method attribute to min-max planning. When you define min-max parameters at the organization level, you also have the option to define sourcing rules to generate purchase requisition information for buy items. You can also generate transfer order or work order requests. For work order requests, you must first set the Build in WIP attribute for the item.

To use min-max planning at the subinventory level, you set the attributes used by min-max planning when you manage item subinventories. First you enable min-max planning for the item subinventory. When you define min-max parameters at the subinventory level, you also have the option to define sourcing rules to generate purchase requisition information or movement requests for the suggested replenishment quantities. You can also generate transfer order requests.

At the subinventory level, min-max planning generates either a transfer order or movement request based on the following rules:

  • If the source type is Organization, and you are using the same organization to which the subinventory belongs, then min-max planning generates an intraorganization transfer order (subinventory transfer).

  • If the source type is Subinventory, then min-max planning generates a movement request.

Print the Min-Max Planning Report

Print the Min-Max Planning report to show planning information for all min-max planned items in an organization or subinventory or for items with on-hand balances either below or above their assigned minimum or maximum on-hand quantities. When you submit the Min-Max Planning report, the first parameter you specify is the planning level parameter to specify organization level or subinventory level.

Note: Supply order requests for purchase requisitions, transfer orders, and work orders go into the Supply Chain Orchestration Interface table. You must run the Process Supply Chain Orchestration Interface process in Oracle Fusion Supply Chain Orchestration to create the actual supply orders in the destination systems.

If you do not have Oracle Fusion Manufacturing and Supply Chain Materials Management installed, you must run the Requisition Import process to create requisitions.

A default item source may be defined at the organization, subinventory, or item level. Min-max planning uses the information from the lowest level to determine the source from which to requisition the item. The ascending hierarchy is:

  1. Item in a subinventory

  2. Source in a subinventory

  3. Item in an organization

  4. Source in an organization

Min-Max Planning Report Parameter Options

When you run the Min-Max Planning report, you set many parameters to specify the results you want for the current submission of the report.

Min-Max Planning Report Parameters

This table lists the parameters you specify when you run the min-max planning report and explains the options you select for each parameter.

Parameter Options

Organization

Specify the organization to run the report for.

Sort By

Select one of the following to specify how you want the report output sorted:

  • Item

  • Category

  • Buyer

From Item and To Item

Enter a range of items to restrict the report to one or more items.

Planning Level

Specify whether min-max planning will be performed for the entire organization or for a specific subinventory.

Item Selection

Specify whether min-max planning will include only items under minimum quantity, only items over maximum quantity, or all min-max planned items.

Subinventory

Enter the subinventory for which you want to run the report.

Lot Control

Specify whether min-max planning will include lot controlled items, non-lot controlled items, or both.

Demand Cutoff Date

Enter the demand cutoff date. The report includes demand on or before this date.

Demand Cutoff Date Offset

Enter the demand cutoff date offset

Supply Cutoff Date

Enter the supply cutoff date. The min-max planning calculation includes open supply orders on or before this date.

Supply Cutoff Date Offset

Enter the supply cutoff date offset.

Restock

Enter yes or no to indicate whether to generate purchase requisition information or movement request orders.

Ship-to Location

Enter the ship-to location to be specified on any requisition records created during the Min-Max Planning process.

Net Unreserved Orders

Enter yes or no to specify whether to include unreserved order quantity in min-max planning calculations.

Include Interface Supply

Enter yes or no to indicate whether to include interface supply as supply quantity.

Net Reserved Orders

Enter yes or no to specify whether to include reserved order quantity in min-max planning calculations.

Include Nonnettable Subinventories

Enter yes or no to specify whether to include nonnettable subinventories.

Display Format

Choose one of the following:

  • Display all information.

    The report displays all columns.

  • Do not display supply and demand details.

    The report doesn't display the Minimum Order Quantity, Maximum Order Quantity, and Multiple Order Quantity columns.

  • Do not display order constraints.

    The report doesn't display the On-Hand Quantity column.

Display Item Description

Enter Yes or No to indicate whether to display item description.

Include Purchase Order Supply

Enter yes or no to indicate whether to include purchase order supply.

From Category and To Category

Enter a range of categories to restrict the report to one or more categories.

From Buyer and To Buyer

Enter a range of buyers to restrict the report to one or more buyers.

Purchasing by Revision

Specify whether to issue purchase order by item revision.

Include Movement Request Supply

Specify whether movement request supply will be included in the min-max planning calculations.

Include Subinventories Without On-Hand Quantities

Enter yes or no to indicate whether the min-max planning planning process creates replenishment movement requests when the source subinventory has zero item on-hand quantity.

When this value is set to No, the min-max planning process suppresses the creation of the replenishment movement request when the source subinventory has zero item on-hand quantity.

How Min-Max Planning Replenishment Quantities Are Calculated

Min-max planning calculates whether the total available quantity is less than the minimum quantity to decide whether to suggest a new order. When min-max planning decides to suggest a new order, another calculation is used to determine the order quantity to suggest.

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:

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, are not included.

Open Demand

The sum of reserved and unreserved sales orders, inventory reservations, account issue movement requests.

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:

  1. 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

  2. Suggest a new order if: total available quantity < minimum quantity.

  3. 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 Fusion 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:

  1. Total available quantity: 25 + 50 = 75

  2. Below minimum quantity check: 75 < 100

    The total available quantity is less than the min-max minimum quantity, so an order is suggested.

  3. 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:

  1. Total available quantity: 25 + 50 - 90 = -15

  2. Below minimum quantity check: -15 < 100

    The total available quantity is less than the min-max minimum quantity, so an order is suggested.

  3. 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.

When you specify to round reorder quantities, min-max planning reorders for item subinventories are automatically rounded up or down.

Settings That Affect Rounding the Reorder Quantity

Reorder quantities for an item subinventory are calculated based on:

  • The setting that you select for the Round Order Quantity parameter on the Manage Inventory Organization Parameters page, General tab, of the inventory organization containing the item subinventory

  • The value that you specify for the Fixed Lot Multiple text box on the Add Item to Subinventory window

How Rounding the Reorder Quantity Affects Min-Max Planning Reorder Quantity Calculations

If you enable rounding the reorder quantity for the inventory organization, and specify the fixed lot multiple for the item subinventory, the reorder quantity is rounded up. If you disable rounding the reorder quantity for the inventory organization, and specify the fixed lot multiple for the item subinventory, the reorder quantity is rounded down.

Note: To round reorder quantities, you must specify a fixed lot multiple.

Example: Rounding the Reorder Quantity

Assume that the reorder quantity is 24. If you enable rounding the reorder quantity and specify 10 for the fixed lot multiple, the reorder quantity is rounded up to 30. If you disable rounding the reorder quantity and keep the fixed lot multiple at 10, the reorder quantity is rounded down to 20.

The fixed lot multiple setting specifies fixed numeric multiples in which items are transacted. Min-max planning uses the fixed lot multiple setting to calculate reorder quantities for item subinventories.

Settings that Affect Fixed Lot Multiple Specifications

Reorder quantities for an item subinventory are calculated using:

  • The value that you specify for the Fixed Lot Multiple text box on the Add Item to Subinventory window

  • The setting that you select for the Round Order Quantity parameter on the Manage Inventory Organization Parameters page, General tab, of the inventory organization containing the item subinventory

How Specifying the Fixed Lot Multiple Affects Reorder Quantity Calculations

To round reorder quantities, you must specify a fixed lot multiple. If you specify the fixed lot multiple for the item subinventory and enable rounding the reorder quantity for the inventory organization, the reorder quantity is rounded up. If you specify the fixed lot multiple for the item subinventory and disable rounding the reorder quantity for the inventory organization, the reorder quantity is rounded down.

Example: Specifying the Fixed Lot Multiple

Assume that the reorder quantity is 24. If you specify 10 for the fixed lot multiple and enable rounding the reorder quantity, the reorder quantity is rounded up to 30. If you disable rounding the reorder quantity, the reorder quantity is rounded down to 20.

Set Up Min-Max Planning

To set up min-max planning for an item, complete steps at the organization, item-subinventory, and inventory profile option levels.

Organization

  1. On the Specifications tab of the Create Item page in Oracle Fusion Product Information Management, set the Inventory Planning Method to Min-Max planning.

  2. Specify the min-max quantities of the item.

Item-Subinventory

  1. In the Setup and Maintenance work area, go to the Manage Subinventories and Locators task:

    • Offering: Manufacturing and Supply Chain Materials Management

    • Functional Area: Inventory Management

    • Task: Manage Subinventories and Locators

  2. In the Select Organization dialog box, select an organization and then click OK.

  3. On the Manage Subinventories page, click Manage Item Subinventories.

  4. On the Manage Item Subinventories page, edit or add an item to subinventory.

  5. Select Min-Max planning and then specify the min-max quantities of the item.

Inventory Profile Option

  1. In the Setup and Maintenance work area, go to the Manage Inventory Profile Option task.

    • Offering: Manufacturing and Supply Chain Materials Management

    • Functional Area: Inventory Management

    • Task: Manage Inventory Profile Option

  2. Enter INV_MINMAX_REORDER_APPROVED in the Profile Option Code field and click Search.

  3. In the INV_MINMAX_REORDER_APPROVED: Profile Values table, select a value for the Profile Value field.

    The profile value determines the requisition status for min-max generated requisitions. Options include:

    • Preapproved: requisition is created in Preapproved status

    • Incomplete: requisition is created in Incomplete status

Calculate the Min-Max Quantities of an Item Automatically

To automatically calculate the min-max quantities of an item:

  1. Set up the item for min-max planning at the organization level or at the item-subinventory level.

    You do not have to enter min-max quantities.

  2. Define classifications to associate similar categories with a classification.

  3. Create policy profiles to define policy parameters.

  4. Assign policy profiles to the classifications.

  5. Run the Calculate Min-Max Planning Policy Parameters scheduled process.

    Running the process updates the organization-level and item-subinventory level min-max quantities.

Example of Min-Max Planning with Process Manufacturing and Co-Products

This example shows how min-max planning of items with associated co-products can exceed the maximum quantity during a replenishment run.

Min-Max Planning of Items with Co-Products

For this example, let's assume these quantities for each item:

Item Minimum Quantity Maximum Quantity In Stock Quantity

A

1000

5000

0

B

1000

2000

0

C

750

2000

0

D

750

2000

0

Your company places two work orders:

  • Work Order 1: Product A with a quantity of 1000

  • Work Order 2: Product B with a quantity of 2000

Work Orders 1 and 2 both have co-products associated with them as shown here:

Product Co-Product Requested Quantity Min-Max Calculation

A

 

1000

1000

B

500

500

C

500

500

B

2000

2000

C

750

1000

D

750

1000

Now, here are your resulting min-max totals compared to the previous maximum quantities:

Item Total Requested Quantity Maximum Quantity

A

1000

5000

B

2500

2000

C

1250

2000

D

750

2000

Note that for Product B, the maximum quantity of 2000 was exceeded. When both work orders for Product A and Product B are factored into a single min-max replenishment run, this scenario of exceeding the maximum quantity can happen. You can get around this by planning one product at a time.

FAQs for Inventory Replenishment

Inventory organization-level min-max planning replenishes a particular item in an inventory organization. When you use inventory organization-level min-max planning, inventory balances, purchase requisitions, inbound transfer orders, and work orders are treated as supply, whereas sales orders, outbound transfer orders, and account issue movement requests are treated as demand.

To set up organization-level min-max planning, navigate to the Create Item page, Specifications tab in Oracle Fusion Product Information Management. Select Min-Max Planning for the inventory planning method, then specify minimum and maximum levels.

What's subinventory-level min-max planning?

Subinventory-level min-max planning replenishes items in a subinventory using the minimum and maximum inventory levels and fixed lot multiple value that you specify for a particular item subinventory. When you use subinventory-level min-max planning, inventory balances, inbound transfer orders, purchase requisitions, and movement requests are treated as supply.

Items are replenished from an external supplier.

Yes. If you're using process manufacturing, min-max plans the primary items along with any associated co-products. This can result in possibly exceeding the maximum quantity for an item.

For example, let's say your company places two process manufacturing work orders which can produce multiple products. Work Order 1 contains product A with a requested quantity of 1000 and a maximum quantity of 5000. Work Order 1 also contains co-products B and C with requested quantities of 500 each. Work Order 2 contains product B with a requested quantity of 2000 and a maximum quantity of 2000. Work Order 2 also contains co-products C and D with requested quantities of 750 each.

In this scenario, the total requested quantity for product B is 2500 (500+2000=2500) and the maximum quantity is 2000. This can happen when running replenishment planning for products A and B in a single replenishment run. You can get around this by planning only one product at a time.