Replenishment Terminology in Sage 500

The Replenishment features in Inventory Management allow you to determine the appropriate quantity to purchase from a vendor based on current stock status, purchase and selling history, and projections. Here is the terminology used in Sage 500 to help you better understand it:

• Demand – Projected future usage for an item
• Working Days – Number of business days in an inventory period
• Daily Demand – Estimated daily demand for an item
• Projected Lead Time – Number of days needed to replenish an item
• Safety Stock – Provides protection against a stock out
• Order Point – Minimum level of inventory to be maintained
• Past Usage – Weighted average of the actual past usage of an item
• Trend Factors – Expected increases or decreases in the demand for an item
• Replenishment Position – Quantity needed to fill all obligations
• Target Order – Vendor requirements for ordering product
• Order Cycle – Average number of days to use enough product to meet a vendor’s target order
• Line Point – Additional items that should be included in a target order
• Total Cost of Inventory – Includes all costs associated with acquiring inventory (i.e., purchase price, replenishment cost, carrying cost)
• Replenishment Cost – All expenses associated with processing a purchase order line
• Carrying Cost – All expenses incurred maintaining stock
• Economic Order Quantity (EOQ) – The purchase quantity that results in the lowest total cost
• Min/Max Reorder Method - Items are ordered when the replenishment position falls below the Minimum Stock value and enough items are ordered to bring the stock up to the Maximum Stock value
• Maximum Reorder Method - Orders items when the replenishment position falls below the Maximum Stock value
• Manual Reorder Method - Items are excluded from the replenishment process and Purchase orders are manually entered