Inventory Reservation and Allocation - Terms and Concepts

This section describes the basic information that is used by the system to reserve and allocate inventory quantities to open and backordered sales order and loaner order lines.

The information in this section mainly applies to warehouse shipments of stocking items.  Vendor Shipment, Special Order, Broker Item, and Nonstock item processing are described in detail in other sections of this document.

Lead Days:  The Lead Days field is maintained in the Catalog or Inventory record for each item.  The Lead Days field stores the number of days required to order the item from your vendor, receive it into stock and ready it for resale.  The Lead Days is basically the number of days you need to reorder the item.  The Lead Days field in each item is also used to determine the scheduling window that is used for the item.

Scheduling Window:   - The date range through which inventory is being reserved and allocated 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 lead days for the item to the system date at the time each order line 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.

Scheduling Window:  The Scheduling window or the Sales Lead Time (Lead) is a number of days that is set for each item.  This number of days is used along with the schedule date in each sales order line and shop order header to determine if the system should try to reserve and allocate inventory to the order or order line.  The system will attempt to reserve and allocate to orders within the current scheduling window and it will not reserve and attempt to allocate to orders that are outside the scheduling window for the item.  The scheduling window allows you to concentrate on shipping out the orders that are scheduled for shipment, and to avoid processing orders that are to be shipped out at a much later time.

Schedule Date:  The schedule date is a date that is stored in each sales order line, and in each shop order header, and it defines the date on which the order or order line is scheduled for shipment (sales order) or to be pulled into production (shop order).  The schedule date is used by the system when it is determining if inventory should be allocated to an order, and when determining which picklists should be printed. 

Reservation – The process of reserving inventory quantities as a sales order, loaner order (or shop order) line is saved.  The system uses the item type, the order fulfillment method, the order quantity and the schedule date plus the lead days in the item to update the reserved and total reserved quantities for stocking items.

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.

Open Order  - A warehouse shipment sales or loaner order line will be saved as open or O status if it is a current order line (the schedule date for the line is within the scheduling window being used for the item), and it is allocated to (partially or fully).  A warehouse shipment line will also be saved as open if the order line  is scheduled out past the scheduling window for the item

Backorder – A warehouse shipment sales or  loaner order line will be saved as backordered or B status if the line is scheduled within the current scheduling window for the item, and if there is no inventory allocated to the order line (the line could be shipped out due to no quantity available).

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.

Reserved Quantity:  The total quantity of the item that is included on open and backordered sales orders, and on open shop order lines that are within the current scheduling window for the item.

Total Reserved Quantity - The Total Reserved quantity is the total open quantity of open and backordered sales order lines and open shop order lines for the item,  regardless of the schedule dates used on the orders..  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.  It is the sum of the total quantity requested by your customers plus the quantity required  for all open shop order lines for the item.

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

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Inventory Reservation