Inventory Allocation – Terms and Concepts

Scheduling Window - The date range through which inventory is being reserved by the sales order program.  The scheduling window is stored in the system as a number of days.  The Sales Order Entry program adds the scheduling window (number of days) to the system date at the time each line item order is entered and compares the result with the scheduled shipping date of the order.  If the order falls within the scheduling window, the items on the order are reserved (allocated) to the order.  If the sales order schedule date does not fall within the scheduling window, the order quantities are backordered and added to the total reserved quantity for the item.  The system can be defined to have either a system-wide scheduling window or an item specific scheduling window (equal to the LEAD DAYS in the items inventory record) by using the system control parameter F248: SCHRANGE.

Reconciliation – Inventory Reconciliation is a process that recalculates the reserved, total reserved, allocated, and on order quantities for each inventory item in each warehouse location.  The Reconciliation process is used to ensure that the inventory quantity fields show the correct quantity based on the open and backordered order lines for the item (sales, shop and purchase orders), and it is also used to handle orders that are moving into the current scheduling window.  If a line item is entered and falls outside of the current scheduling window for the item, it is included in the total reserved quantity for the item but it is not included in the reserve quantity for the item and it is not allocated to by the system.   As time goes by, the order line eventually moves forward into the scheduling window, and the reconciliation program then includes the order quantity in the reserved quantity for the item.  Since the reserved quantity for each item may change on a daily basis as orders are entered and the date changes, the reconciliation procedure is used daily to recalculate the reserved quantity of each inventory item before any available inventory is allocated.  This procedure can be made part of daily night time processing

Allocation - The procedure whereby available inventory is allocated to sales orders.  Available inventory is allocated to sales order line items in one of two ways.  The Sales Order Entry program allocates available inventory to sales order line items if the schedule date for the order falls within the scheduling window.  The Sales Order Entry program performs this allocation procedure as the sales order line items are saved.  The Allocate Available Inventory program is used to allocate available inventory to orders which did not fall within the scheduling window at the time the order was saved, or for which there was no available inventory the time the order was saved.

Scheduled Ship Date - The date that an item on an order is scheduled to be shipped to the customer.  The scheduled shipping date for each item is stored in the Sales Order Line Item file.  The scheduled shipping date for sales order line items will default to the system date at the time that the order is entered.  The scheduled shipping date for an entire order or for individual sales order lines may be changed by the user in the Sales Order Entry program.

Reserved Quantity - The quantity of an inventory item that is reserved to fill open and backordered sales orders lines with schedule dates that fall within the scheduling window.  The reserved quantity of each inventory item is stored in the Inventory Master file.  The Sales Order Entry program compares the scheduled ship date on each order to the system date and the scheduling window and increments the reserved quantity accordingly each time a sales order line is entered into the system.

Total Reserved Quantity - The total quantity of each inventory item that is currently on open and backordered sales orders regardless of schedule date.  The total reserved quantity of each inventory item is stored in the Inventory Master file.  The total reserved quantity for each inventory item includes the reserved quantity for the item.

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Inventory Allocation Methods