Inventory Planning

R12 Replenishment Fundamentals
Copyright © 2007, Oracle. All rights reserved.

Objectives
After completing this module, you should be able to do the

following:
• Perform forecasting
• Explain reorder-point planning
• Perform min-max planning
• Perform replenishment counting
• Generate kanban cards
• Set up inventory planning profile options
• Identify Implementation Considerations

Overview of Inventory Planning
Time to replenish
• Min-Max planning
• Reorder-point planning
• Kanban replenishment
• Replenishment counting

Order Planning
Order time Order size

“When should I order?” “How much should I order?”
Planning methods
“Which planning method should I use?”

How Much to Order
Carrying costs
Order costs
Expected
Demand

Replenishment Process for Intra-Org Supply
Sources
Create allocations
Replenishment move for inventory to be
order automatically moved
created
Print move
order pick slip
Transact move order

Replenishment Process for Supplier Supply
Sources
External purchase
requisition created
Run requisition
import
Auto create Approve Receive material

purchase order purchase order from supplier

Replenishment Process for Inter-Org Supply
Sources
Internal purchase Run Requisition Run Order import

requisition created import
Receive material
Pick release internal Ship confirm from other
sales order internal sales order organization

Replenishment Process for Product Supply
Sources
Work order created Release work order
Complete work order

when assembly finished

Replenishment Methods
Replenishment Methods
Available Supply
Reorder-point
Available to
Promise
Min-max
Planning setup
Replenishment
counting
Planning profile
options
Kanban
replenishment

Overview of Inventory Forecasting
Inventory forecasting is the process of extrapolating the

expected demand of an item over a number of periods in
the future.
Supply Demand

Forecast Types
Statistics Time period
Demand

Forecast Setup and Maintenance
Focus and Statistical forecast

setup and maintenance steps
1 Define forecast set
2 Define forecast rules
3 Generate forecasts
4 Maintain forecasts
5 Use forecasts

Oracle Inventory Replenishment Methods
Reorder-point Planning
• Safety stock
• Replenishment lead time
• Item demand
• Order cost
• Carrying cost
Min-Max Planning
• Minimum inventory level
• Maximum inventory level
Kanban Replenishment
Replenishment by visual cue
Replenishment Counting
• Nontracked subinventories
• Locators in subinventories

Replenishment Methods Levels
Planning Method Organization Subinventory
Reorder-point Yes No
Min-Max Yes Yes
Replenishment Counting No Yes
Kanban N/A N/A

Safety Stock
Planning of Item
Base Level of Inventory
Fluctuations in Demand

Economic Order Quantity
2 x annual demand x avg cost of order preparation

EOQ =
Annual inventory carrying cost percentage x unit cost

Overview of Reorder-Point Planning
Reorder Point = Safety Stock+Forecast demand during lead time
Quantity
Reorder-Point
Safety Stock
Time

Uses of Reorder-Point Planning
By Organization Independent Demand
Item Definition Inexpensive Items

Reorder-Point Planning Steps
Enter item planning

1 attributes.
2 Forecast item demand.
3 Define safety stocks.
Run Reorder-point
4 report.

Performing Reorder-Point Planning
Planning
Forecast On-order quantity Information
information
Creating
requisitions
Report
Submission

Overview of Min-Max Planning
Minimum Maximum
inventory level inventory level
Below minimum! Time to order

Uses of Min-Max Planning
Structure Items
Independent
Entire Organization Demand
Subinventory Tightly Controlled

Min-Max Planning
Determine minimum Enter minimum

and maximum quantity
quantities
Enter maximum
quantity
Do you want Yes Enter fixed lot

specific lot increments
increments?
Enter minimum
No
order quantity
Run Min-max Enter maximum

report order quantity

Min-Max Planning: How Much to Order?
The following equation represents how much you should

order:
Order quantity = (maximum quantity) - [(on-hand

quantity) + (quantity on order) ]
= - +

Min-Max Planning Steps
Enter item planning

1 attributes.
Define subinventory-
2 level min-max
information (optional).
Run the Min-max

3 report.

Item Planning Attributes
Item planning attributes include setting up general

planning attributes for either the organization or the
subinventory in which you want to use Min-max planning.

Min-Max Planning Setup Procedure
Set up the appropriate Select an inventory

profile value for planning method.
requisition approval.
Specify a planning level

(either organization or
subinventory).
Enter the following:

• Min-max minimum quantity
• Min-max maximum quantity
• Fixed-lot-size multiplier
• Minimum order quantity
• Maximum order quantity

Selecting a Planning Level
You can select min-max planning as the inventory planning

method for each item. If you select the min-max planning
method for an item, Oracle performs min-max planning for
that item at both the organization and subinventory levels.
To perform min-max planning at both the organization and
the subinventory levels, you need to enter minimum and
maximum quantities for each level.

Entering Planning Attributes
Select an inventory Enter min-max

planning method. minimum quantity.
Enter min-max Specify a fixed-lot-size

maximum quantity. multiplier.
Specify a minimum Specify a maximum

order quantity. order quantity.

Submitting the Min-Max Planning Requests
Set up item planning attributes
Submit concurrent process
Generate min-max planning report

Overview of Replenishment Counting
Organization
Subinventories
Replenishment Counting is a method of ordering items for

non-tracked subinventories.

Uses of Replenishment Counting
Buyer
Item
Subinventory

Replenishment Planning Steps
1 2
Specify requisition
Define subinventory.
approval status.
3 Define subinventory 4
Enter replenishment
replenishment
counts.
information.
5 Validate and process

6
Create requisitions.
replenishment counts.

Subinventories Window
You utilize the Subinventories window to define

subinventories for which you want to perform
replenishment counts.

Item Subinventories Window
Use the Item Subinventories window to enter minimum and

maximum quantities for each item that you store in a
subinventory.
Minimum Quantity
Maximum Quantity

Item Subinventories: Order Modifier Tab
In the Order Modifier tabbed region of the Item

Subinventories window, you specify the following
information:
• Fixed-lot-size multiplier
• Minimum order quantity
• Maximum order quantity

Replenishment Count Headers
You can enter counts to replenish subinventories. Oracle

Inventory replenishes subinventories according to the
method that you use to enter counts. Oracle Inventory
does not store on-hand quantity information for
non-tracked subinventories.
On hand quantity Subinventory

Replenishment Count Lines
You can select one of three replenishment count types for

each item:
On hand Quantity
Order Maximum
Order Quantity

Processing Replenishment Counts
The replenishment processor performs the calculations

that are necessary to verify whether Oracle Inventory
should create requisitions. You can either choose to
process the replenishment counts or save your changes
and run the replenishment processor later.

Mobile Replenishment Count Overview
Kanban Replenishment PAR

Replenishment Count Count

Overview of PAR Counting
Organization
Subinventories
Locators

Processing PAR Counts
Organization
Subinventory
PAR count is locator-level replenishment count
Locator 1 Locator 2 Locator 3 Locator 4

Reorder Quantity for PAR Count
PAR Level Quantity Count Type Reorder

Quantity
100 25 On-hand Quantity 75
100 Not applicable Order PAR 100
100 25 Order Quantity 25

Overview of Kanban Replenishment
CM1148 Full Bin CM1123
CM1148 CM1148
Ready to Replenish Bin in Use

Kanban Cards
Part A
KANBAN
Part B
KANBAN
• Shorter lead times

• Reduced inventory

Kanban Planned Items
Set Release Time Fence

Item Attribute to Kanban
KANBAN
Define the Pull sequence
and generate new
kanban cards

Kanban Cards
Subinventory
KANBAN Item
Locator

Kanban Supply Status
New
Full
Wait
KANBAN
In-Transit
Empty
In-Process

Kanban Replenishment Sources
Inter-Org
Intra-Org
Production
KANBAN
Supplier
Flow Schedules
User Defined

Kanban Card Printing
KANBAN

Planning and Replenishment Reports
Report Description
Min-Max Planning Report Use this report to show planning

information for all items, or items
with on-hand balances either below
or above their assigned minimum or
maximum on-hand quantities.
Planner Listing Use this report to list material
planners or planning entities. You
assign planners to inventory items
when you define items.
Reorder Point Report Use this report to show planning
information for items for which the
Inventory Planning Method is set to
Reorder Point.

Planning and Replenishment Reports (Cont)
Report Description
Forecast Rule Listing Use this report to view the data you
entered for forecast rules.
Item Replenishment Count Report Use this report to review the counts
you entered for items before creating
requisitions. You can also use the
report to validate the source
information for the replenishment
before you run the requisition
process.
PAR Replenishment Count Worksheet This report addresses requirements
that relate to the health care industry.
This report is similar to the Item
Replenishment Count Report, but in
addition captures information that is
specific to hospitals.

Profile Options
Profile Option Description
INV: fill Kanban on Partial Move Determines whether or not a kanban

Order Receipt card can be considered filled if the
move order created to fill it was only
partially transacted.
INV: Replenishment Move Order Enables you to create only one move
Grouping order header per request.
TP: INV Enter Replenishment Count Indicates processing control in the
Form Enter Replenishment Count window.
INV: Replenishment Count Indicates the status of Subinventory
Requisition Approval Replenishment requisitions created
by the replenishment processor.

Profile Options (Cont)
Profile Option Description
INV Replenishment Count Line Indicates the action taken when a

Failure failure is detected while processing a
replenishment count line.
INV: Minmax Reorder Approval Indicates the status of requisitions
created by the Min-Max Planning
Report.
INV: Round Reorder Quantity provides the min-max reporting
process with rounding options for
reorder quantity.

Implementation Considerations
Items
Make Buy

Implementation Considerations (Cont)
Supplier Sources
Demand Sources
Documents

Summary
You should now be able to do the following:

• Perform Forecasting
• Perform Reorder-point planning
• Perform Min-max planning
• Perform replenishment counting
• Generate kanban cards
• Set up Available to Promise (ATP)
• Perform ATP checks
• Set up inventory planning profile options
• Identify the Implementation Considerations

Inventory Planning

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R12 Replenishment Fundamentals

Copyright © 2007, Oracle. All rights reserved.

After completing this module, you should be able to do the

Copyright © 2007, Oracle. All rights reserved.

Copyright © 2007, Oracle. All rights reserved.

Order time Order size

Copyright © 2007, Oracle. All rights reserved.

Copyright © 2007, Oracle. All rights reserved.

Transact move order

Copyright © 2007, Oracle. All rights reserved.

Auto create Approve Receive material

Copyright © 2007, Oracle. All rights reserved.

Internal purchase Run Requisition Run Order import

Copyright © 2007, Oracle. All rights reserved.

Work order created Release work order

Complete work order

Copyright © 2007, Oracle. All rights reserved.

Copyright © 2007, Oracle. All rights reserved.

Inventory forecasting is the process of extrapolating the

Copyright © 2007, Oracle. All rights reserved.

Statistics Time period

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Focus and Statistical forecast

1 Define forecast set

2 Define forecast rules

Copyright © 2007, Oracle. All rights reserved.

Copyright © 2007, Oracle. All rights reserved.

Planning Method Organization Subinventory

Min-Max Yes Yes

Replenishment Counting No Yes

Kanban N/A N/A

Copyright © 2007, Oracle. All rights reserved.

Base Level of Inventory

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2 x annual demand x avg cost of order preparation

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Reorder Point = Safety Stock+Forecast demand during lead time

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By Organization Independent Demand

Item Definition Inexpensive Items

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Enter item planning

2 Forecast item demand.

3 Define safety stocks.

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Copyright © 2007, Oracle. All rights reserved.

Below minimum! Time to order

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Subinventory Tightly Controlled

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Determine minimum Enter minimum

Do you want Yes Enter fixed lot

Run Min-max Enter maximum

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The following equation represents how much you should

Order quantity = (maximum quantity) - [(on-hand

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Enter item planning

Run the Min-max

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Item planning attributes include setting up general

Copyright © 2007, Oracle. All rights reserved.

Set up the appropriate Select an inventory

Specify a planning level