As sales order lines for warehouse shipments are created, the system uses the following logic to update the quantity fields in the item being ordered.
The system looks at the scheduling window for the inventory item that is stored in the Lead (lead days) field of each inventory record. The Lead field in each Item defines the amount of time that it takes to process an order for the item from the sales side. The Lead field or sales reservation window is normally set to the number of days it would take to order the inventory item from a vendor, receive it into your warehouse and turn it around (i.e. ship it out against a sales order). This value is normally one or more days greater than the PO lead time that is defined for the item (to allow time for the item to be ordered by purchasing once the sales order is created, and to be received into the warehouse by the receiving department).
The system looks at the schedule date of the line item being created.
If the schedule date for the sales order line is less than or equal to the current date plus the reservation window for the item, the sales order line is current and the system tries to allocate any available inventory to the order line so it can be shipped out. If the item being ordered is not available, the system will suggest that you re-order it.
If the schedule date for the order line is greater than the current date plus the lead days for the item, the line is outside the current scheduling window and the system will wait to allocate or suggest ordering product until the line falls into the window (the Inventory Reconciliation program handles items that move into the scheduling window as the actual system date moves forward).
The system updates the inventory quantities based on the above two variables. If the order line is in the current window, the system increases both the QTY_RES and the TOT_RSV field in the Inventory record for the item by the ordered quantity in the sales order line. If the order line is outside the current window, the system increases only the TOT_RSV quantity for the item in the Inventory Master file. The QTY_RSV field stores the total quantity of open sales and shop order lines for the item that are in the current window and the TOT_RSV field stores the total quantity of open sales and shop order lines for the item regardless of whether the lines are in the current window.
If inventory is available and the line is in the scheduling window, the system tries to allocate inventory to the order line.
The system first calculates the available quantity for the item by taking the quantity on hand for the item and subtracting the allocated quantity for the item (the allocated quantity for the item is the portion of the on hand quantity that has already been assigned to specific sales and shop order lines).
The system then adjusts the available quantity down by the amount of safety stock (reserved inventory) that has been defined for the item. Safety stock is the quantity of an item that you always want to have in stock based on promises to specific customers to have the item available at all times.
The system then checks the Auto_Allocate flag for the item in the Inventory location in which the order is being entered. If the flag is set to Y, the system will allocate the available quantity for the item to the order line, and if the flag is set to N, the system will not allocate to the order line (even if stock is available for the order).
Once the system has allocated any available quantity to the order line, the quantity allocated to the order is added to the QTY_ALLOC field in the Inventory Item and the order line is updated to show the current allocated quantity and the correct status The status codes include, O or open for a line in the window with an allocated qty, Bor backordered for a line in the window with no allocated quantity
Order Lines that are scheduled beyond the current window with no allocated quantity i.e. a future order) are also saved as Open. These lines are updated to Backorder status when they become current - they remain backordered, until the system is able to allocate inventory to themat that time in which case they remain open.