Once a safety stock quantity has been defined for a specific warehouse and item combination, the system will use the safety stock quantity during the Inventory Allocation process. Inventory Allocation is the process that actually assigns specific on hand quantities for an item to the sales or shop order lines that are waiting for the item. Inventory Allocation can be done automatically by the system, and allocation can also be done manually. Whether an item is automatically allocated to by the system can be determined on an item by item basis using the Auto Allocate field that is maintained in the Inventory Master file. If the Auto Allocate flag for the item is set to Y, the system will attempt to allocate any available quantities for the item to the orders that are processed for the item. If the AutoAllocate flag for the item is set to N, the system will not try to allocate to the item automatically, and any on hand quantities for the item must be manually assigned or allocated to the orders for the item. Additional options in the system allow you to define the maximum quantity that can be automatically allocated by the system on an item by item basis.
The Inventory Allocation process takes place at several points in the system. These include during Inventory or PO Receiving, during Sales Order entry process, and as shop orders are entered into the system. During the Inventory Allocation process, the system checks both the Auto Allocate flag for the item being processed and the safety stock level for the item. If the item has the auto allocate flag set to Y, the system will not automatically allocate inventory below the safety stock level defined for the item. This means that if they system has 10 units on hand, of which 5 are already allocated and the safety stock is at 3; the system will only allocate an additional two units. If the auto allocate flag for the item is set to N, the system will not automatically allocate any available quantity for the item, and any orders for the item must be manually allocated.