You can choose between three order methods when creating purchase order suggestions in pixi: On Demand, refill Target Stock and refill stock for a specific range (Stock Turnover).
On Demand
When should you use the order method "On Demand"?
Use this method if you want to create purchase order suggestions for items which are currently needed to ship all open customer orders.
How is the order quantity calculated?
This is how pixi calculates the required quantity for an item using On Demand order method:
Required Quantity = Open Customer Orders - Open Supplier Orders - Physical Stock
Check scenarios and examples to learn more.
Example: Order method “On Demand” in pixi Web
Click screenshot to view in full size.
Target Stock
When should you use the order method "Target Stock"?
Use this method, if you want to create purchase order suggestions for items, where the reorder level was reached and you want to order the quantity needed to reach the target stock and ship all open customer orders.
Important: Supplier order suggestions will be created properly with this method, if reorder level and target stock are set for all items. If these values are not set, then purchase orders will be created according to the On Demand method.
How is the order quantity calculated?
Here you can see a simplified graphic for the order method Target Stock:
The graphic shows the progression of the available stock for an item in a specific time frame. For illustration purposes, we assume sales per day to be linearly. That's why the Available Quantity (blue line) is a decreasing straight line at an angle of 45 degrees. In case the Reorder Level is reached, the items can be ordered by creating an order suggestion. Note that pixi doesn't automatically create the order suggestion - this has to be done manually. Therefore, at the time the order is created, the available quantity can also be below the Reorder Level.
The Needed Quantity equals the difference between Target Stock and the current available stock. It is the quantity, which is needed, to refill the target stock at the time the order is created. The Order Quantity can be higher than the needed quantity due to the supplier's delivery time, the minimum order quantities and packaging units. Since there is a difference between order and delivery date (Delivery Time), the available quantity could further decrease during this time and as a consequence, the order quantity might not be enough to refill the target stock at the time of the goods receipt.
In general, it is recommended to set the reorder level to a value which is high enough to cover the estimated sales between the order and delivery date. Also defining a Safety Stock can help to identify items, that are sold quite often and should have an appropriate stock. Otherwise, there might be the danger of running out of stock until the delivery arrives.
This is how pixi calculates the required quantity for an item using the Target Stock order method:
Check, whether the stock quantity reached the reorder level: Reorder Level >= Available Stock.
In case the stock quantity fell below the reorder level:
Required Quantity = Target Stock - (Open Supplier Orders + Available Stock)
Check scenarios and examples to learn more.
Example: Order method “Target Stock” in pixi Web
Click screenshot to view in full size.
Stock Turnover
When should you use the order method "Stock Turnover"?
Use this method for middle and long term stock refilling, especially for items that you sell continuously (never out of stock items) or you sell bigger quantities in a certain season. So for example if you want to order Christmas calendars for the upcoming season, you select the Christmas season time frame from last year as the basis for the sales per day calculation.
How is the order quantity calculated?
Step 1: Defining the average sale per day for a linear sales prediction
The calculation of the stock turnover is based on the item sales in a specific time frame. In pixi you can choose between a range based on the last X days or based on a specific time frame (e.g. last Christmas season). The item sales depend on the chosen time frame:
The graphics show the fluctuation of sales of an item over time. Due to the short time frame selected in the left graphic, the average sales number is quite high. In contrast, in the right graphic a longer time frame was selected. As you can see, the time frame contains increasing and decreasing item sales. This leads to a lower average item sale in comparison to the shorter time frame - the minimum and maximum values compensate each other.
Let's suggest, we would create an order suggestion for both cases. The order quantity would be higher for the short time frame than for the longer time frame, since the average sale was higher for the short time frame (based on a linear sales prediction).
The calculation applies rounding on the required quantity. Required quantities are rounded from 0.01 to 0.99 to 1.
Step 2: Defining the order quantity based on the predicted sale
The following graphics show the progression of the available stock for an item in a specific time frame. Assuming that the sale per day is linear, the Available Quantity (blue line) is a decreasing straight line at an angle of 45 degrees:
To start simple, we assume that the delivery will arrive on the day the order was created (delivery time is 0 days), i.e. the needed quantity equals the order quantity because there is no delivery time and also nothing is sold. The needed quantity is calculated so that the stock is refilled to last for the defined time frame (Stock Turnover, green line). |
Since in reality, a few days pass between the order and delivery date, this needs to be considered in the calculation of the order quantity. So the order quantity is calculated from the predicted amount of sales for the defined time frame (Stock Turnover, green line) and the predicted sales until the supplier delivers (Delivery Time, red line). The calculation for Delivery Time now specifically includes the delivery days of the supplier. The stock is therefore refilled by taking into account the defined time frame (Stock Turnover) as well as the delivery time of the item (if not available, the delivery time of the supplier) so that it is sufficient for a specified period. |
But pixi doesn'|t automatically create the purchase order suggestion - this needs to be done manually. Therefore, at the time the order was created, the available quantity can also be below the reorder level.
By using the parameter Consider reorder level you can choose, whether only items are included that have stock below the reorder level or all items with insufficient stock for the specified stock turnover time frame. In case the reorder level is included, it has to be set for all items.
This is how pixi calculates the required quantity for an item using the Stock Turnover order method:
(If ""Consider reorder level"" is enabled) Check, whether the stock quantity reached the Reorder Level: Reorder Level >= Available Stock.
In case the stock quantity fell below the Reorder Level:
Required Quantity = (Stock Turnover * Sales Per Day – Returns) – (Open Supplier Orders + Available Stock) + (Delivery Time * Sales Per Day)
Important:
Open customer orders are orders, that are still open and need to be shipped to the customer. Orders with status ANG are always considered to be open customer orders. Orders in status HAL are only considered in the order suggestion, if the setting Auto Order When On Hold is activated for the particular payment type in pixi Control Center > tab Tables > table Payment Types. Customer orders with status NEU, AUS, EIN, STO, NLB, FUT or FUS are not considered within the calculation.
The amount of open purchase orders depends on the parameter Create orders: if only new orders are created, also existing orders in status NEW are considered to be open purchase orders to prevent, that too many items are ordered.
Items, that were sold in pixi POS application, are also considered when calculating the ""Sales Per Day"" value.
Check scenarios and examples to learn more.
Example: Order method “Target Stock” in pixi Web
Click screenshot to view in full size.