Utilising Overstocks

By using the all branches option Acumen is able to efficiently calculate overstocks for a product and offset these overstocks against purchases for other branches. Acumen does this by calculating an overstock pool. It then attempts to purchase for each branch that requires stock. If a branch requires stock and there is an overstock pool the overstock pool will be drawn upon to reduce the requirement. Such drawings will of course reduce the overstock pool for further requirement calculations.

For example if branch "North" has an overstock of 50 units and branch "South" has a requirement for 10 units. The purchase for "South" is offset by taking 10 units from the overstock pool of 50. Nothing is purchased for "South" and the overstock pool is now reduced to 40. If branch "East" requires 70 units then the remaining overstock pool will be offset against this and a purchase order will be raised for 30 units (70 required - 40 overstock pool = 30 to purchase). The overstock pool is now reduced to 0.

The amount of overstock that a branch has to contribute to the overstock pool is calculated as follows:

$$Overstock = Stock\ On\ Hand - (Maximum\ Months\ Stock * Working\ Average)$$

This figure is rounded down to the nearest multiple of the Minimum Order Quantity. The reason for this is to avoid the need for shipping partial pack quantities from branch to branch. The minimum order quantity is set either on the product record or in the Supplier Product Catalogue. The system will use the catalogue in preference to the product file however if there is no minimum set in the catalogue then the product file value is used. If neither file sets a minimum order quantity then one is assumed.

As an example if a branch has stock on hand of 76 units, a working average sales of 10 units, a maximum of 6 months stock and the product comes in packs of 6 then the following calculations occur. Overstock = 76 - (10 x 6) = 16. Rounded down to the nearest multiple of 6, Overstock = 12.