Sporadic Demand consists of Active products that sell infrequently or intermittently over a twelve month period. As such, these products can be difficult to forecast using predictive methodologies.
You can adjust the formulas used to determine which products are considered sporadic. See Sporadic Demand under the Forecast Parameters section of Set forecast parameters.
Use the following procedure to set a Max Stock Qty (based on the historical mode or median average demand).
- Go to Purchasing > Forecast >Sporadic Demand.
Identify which products you want to analyze:
- From the Show list, choose on of the following:
- Products without Maximums: This consists of products that are considered to have sporadic or infrequent demand, that currently have no Maximum Stock Quantity set.
- Products with Expiring Maximums: This option prompts for a future date, selecting products where the Maximum Stock Quantity has expired or will soon expire, and need reevaluation.
- All Products: Selects all Active products for sporadic analysis (including X ranked products).
- Choose the Warehouse.
- Optionally, choose the Buyer of the products that you want to examine.
- Click Go.
Note: Certain products are excluded from the Sporadic Demand to prevent maximums from being unnecessarily set. Product exclusions consist of:
-Items that already have a Max Stock Quantity (for the warehouse).
-Items with a special status other than Active (ex: Non-Stock, discontinued, etc).
-Items ranked X.
-Items that have less than one year's worth of demand.
- From the Show list, choose on of the following:
Products are sorted by the Difference, with the highest values listed first. The Difference represents the increase you can expect to experience in inventory value if you accept the Suggested Max. It is important to review the higher value differences to ensure that inventory doesn't reach inflated levels.
Review the following information about products with Sporadic demand:
- Product The product reference code. To view details about the product, click this link.
- Description The description of the product.
- UOMThe purchasing unit of measure for the product.
- HitsThe number of times the product has appeared on an invoice in the last 12 months.
- Dmnd MthsThe number of months out of the last 12 that there has been any demand for the product. By default, Active products with demand in less than 9 out of the last 12 months are considered sporadic. You can modify this calculation in Purchasing>Forecast>Forecast parameters under "Number of Months of usage to define a recurring product."
- Sugg MaxThe Suggested Maximum Quantity for the product. This value is based off of the mode, which is the most commonly ordered quantity. If no mode can be determined, than the median average (middle number of a products demand, or the average of the middle two numbers) demand is used.
- New MaxThe New Maximum Stock Quantity for the product (by warehouse). Selecting the Set to Suggested button will copy the Suggested Max into this field. Note that manual adjustments made into the New Max column remain even after selecting the Set to Suggested button.
- Exp DateThe expiration date for the new maximum stock quantity. By default, maximums will expire 180 days from the day they are set. This can be modified in the Forecast Parameters (Purchasing > Forecast > Setup) with the setting "Sporadic Demand Maximum Expiration Days." Note that maximum quantities require periodic reevaluation as demand patterns change, which is why 180 days has been selected as the default.
- Non stockCheck this box to change the product status to Non-Stock (for the warehouse). Tip: Consider using the grid filter to only display products with "Less Than" 2 Hits to quickly identify potential Non-Stocks
- ROPThe Reorder Point is a system-calculated field that is based on your Safety Stock % (set in the Product Master > General tab) and the average weekly Demand for the last 12 months. It is used to determine when a product appears on the Critical Inventory Report and Projected Purchase Order. Please note that if the Min Stock Quantity (set in the Product Master > General tab) is greater than system calculated Reorder Point, the Min Stock Quantity will be used as the Reorder Point for the item. If demand increases so that the calculated Reorder Point is greater than the Min Stock Quantity, the system will use the calculated Reorder Point for the product. Also note that the Reorder Point is listed here for reference and does not effect the Suggested Max Quantity. For example, (Weekly Demand x Lead time in Weeks + Safety Stock) (10 per week x 2 weeks to get here + 20% safety stock) = 24 for a Reorder Point
- CostThe cost of the product. This cost is based on the Company Master (File > Company > Master) setting Inventory Adjustment Cost Column.
- Reorder Value The inventory valuation if you order to the current Reorder Point. Cost x Reorder Point = Reorder Value
- Sugg Reorder Value The inventory valuation if you order to the Suggested Maximum Stock Quantity. Cost x Suggested Max = Suggested Reorder Value
- Difference The Difference between the Suggested Reorder Value and the Reorder Value. This helps identify potential increases in overall inventory value. Suggested Reorder Value - Reorder Value = Difference
- New Value The inventory valuation if you order to the New Maximum Stock Quantity. Cost x New Max = New Value
- New Difference The Difference between the New Value and the Reorder Value. This helps identify potential increases in overall inventory value. New Value - Reorder Value = New Difference
Look in the Hits column for products with less than 2 hits per year. These products are typically special order products, which do not need to be stocked on a regular basis; therefore, set them to non stock by selecting the Non Stock check box for that product row,
The Suggested Maximum Quantity for the product is based off of the Mode, which is the most commonly ordered quantity over the most recent twelve months of demand. If no Mode can be determined, then the Median Average Demand is used instead. This is the middle number of a products demand. Items with an even number of non-zero demand periods have no middle number and will therefore use the mean average of the middle two demand quantities. Once the Mode or Median has been established, it is then multiplied against the established Multipliers, as set in the Forecast Parameters.
Manually update the Suggested Maximum for all outliers in the New Max column.
- Click the Set to Suggested button located on the bottom toolbar. The Suggested Max quantities will be copied into the New Max field. Your manually adjusted outliers will not be overridden. The DC (Demand Changed) box will be automatically selected for all products whose demand has been adjusted manually.
Once set, you may wish to sort the New Difference column in Descending order. Reevaluate those products to ensure the proper maximum quantity value is set.
Click Save button.
Note: To accurately calculate a Median or Mode, a completed twelve months of invoice data is necessary. If you have recently converted to Inform, such data is not available. In that circumstance the units sold for each month are used (rather than each invoice). This will lead to recommendations that are slightly higher than normal. Once a full set of data is available it will automatically be utilized.