Minimum Order Quantity

There is a default minimum order quantity field on the Product file. The catalogue can choose to override this figure by replacing it with a figure of its own. The minimum order quantity is used to round up a purchase order quantity. If a product is purchased in a pack quantity then the automatic purchasing system will only order in multiples of that quantity. If rounding up the purchase order in this way results in a purchase quantity that exceeds the maximum stock level then the minimum order quantity is ignored for that item and the purchase quantity is rounded to the nearest whole unit.

For example if concrete is purchased in pellets of 50 bags but sold by the bag then 50 should be set as the minimum order quantity. If the purchasing system calculates that 10 are needed then it will order 50 as this is the minimum order quantity.

The minimum order quantity is also used in the rounding of overstocks. In this case the amount of overstocks is rounded down. For example if a branch has 278 bags of concrete and its maximum stock comes to 250 then no overstocks are available as the twenty eight bags that can be considered overstock are less that the minimum order quantity of 50. This prevents uneconomical transfers such as trying to ship 28 loose bags of concrete rather than an entire pellet.

Some examples of catalogue entries for a supplier may look like this:

Group	Product	Preference	Lead Time	Percent	Minimum
Cars		Secondary	2 Months		10
Ford		Primary	14 Days		1
Falcon		Alternate	14 Days		1
Fairmont		Primary	7 Days	80%	4
Fairmont	94 Blue sedan	Not Available

From these entries we learn the following things:

• We do not buy all our Cars from this supplier as a preferred supplier (Secondary preference) and we normally buy cars in lots of 10. It typically take two months to receive cars from this supplier.

• We do buy Ford cars from this supplier as a matter of preference, these cars arrive faster than normal taking only two weeks. We can buy Fords individually and don't have to buy 10 at a time.

• For some reason we don't normally buy Ford Falcons from this supplier (preference for Falcons is Alternate only). Perhaps the price is too steep?

• For Fairmonts we can receive delivery in only one week. Perhaps because of this we have elected to buy eighty percent of all our Fairmonts from this supplier. There will be another supplier or suppliers in the catalogue from which we will purchase the other twenty percent, perhaps to keep other suppliers from losing interest.

• We cannot purchase a 94 Blue Sedan Fairmont from this supplier for some reason.