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