How to manage reorder levels for lean manufacturing?

Hi,


We are currently managing the reorder levels of all items and I must say that it is a painstaking job to maintain them manually. Honestly my knowledge about the reorder levels is very limited but this is how we calculate the reorder levels for an item.

Re-Order level for an item = (Qty Sold + Qty used to make other items)/ (No of months of time frame) 

Basically this gives us the monthly usage for that particular item. Now how do we calculate this is by referring to the Stock Ledger for that item. But as you might have guessed that referring the stock ledger for the item and then calculating it for that item is ok if there are only 5 or 10 items but what if there 1000s of items then the process becomes even more so lengthy.

I just wanted to know if there is a report which could tell us the reorder level defined by the rules so that we could refer that report and see if the ROL for an item needs to be changed or not.

Kindly let me know if we are doing something wrong in our approach.



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Re-order level is generally calculated by the following formula:

reorder_level = (average_qty_consumption_per_day * lead_time_days) + minimum_inventory_level

where average_qty_consumption_per_day is average qty consumed per day due to manufacturing and sales, lead_time_days is the time taken to receive material after placing order and minimum_inventory_level is safety stock.

I am thinking to make an report which will show average_qty_consumption_per_day and reorder level based on avg formula.


On 25-May-2013, at 10:22 AM, Aditya Duggal wrote:

Hi,

We are currently managing the reorder levels of all items and I must say that it is a painstaking job to maintain them manually. Honestly my knowledge about the reorder levels is very limited but this is how we calculate the reorder levels for an item.

Re-Order level for an item = (Qty Sold + Qty used to make other items)/ (No of months of time frame) 

Basically this gives us the monthly usage for that particular item. Now how do we calculate this is by referring to the Stock Ledger for that item. But as you might have guessed that referring the stock ledger for the item and then calculating it for that item is ok if there are only 5 or 10 items but what if there 1000s of items then the process becomes even more so lengthy.

I just wanted to know if there is a report which could tell us the reorder level defined by the rules so that we could refer that report and see if the ROL for an item needs to be changed or not.

Kindly let me know if we are doing something wrong in our approach.



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