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Perform a purchase suggestion simulation (IBS Inventory Control)

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Note: Section Purchase suggestion calculation describes the different calculations.

There are two different types of purchase suggestion simulation:

  • The Purchase suggestion simulation describes how the actual calculations to determine if to buy or not has been made. The purchase suggestion simulation program is used to verify and analyse the calculations that are made in the purchase suggestion creation. However, since this is a simulation, the system will not be updated.
  • The Purchase cost simulation is a way to evaluate the costs associated with different alternatives, such as examining if it is worth to buy 50 PCS extra if you can get them 3% cheaper, etc.

Purchase suggestion simulation

For each item/warehouse combination in the system, you can simulate the purchase suggestion analysis to determine why certain combinations appear on the purchase suggestion, or why they do not appear on the purchase suggestion.

This simulation is done for item/warehouse records with both positive and negative ROPD, which means that you can use this function to see why a certain item/warehouse record does not appear on a purchase suggestion. You can add extra planning days to analyse the effect of having longer (or shorter) lead times.

Note: If you simulate a purchase suggestion for a purchase type 2 item where the Intermediate purch field is set to NO, and it is not yet time for a periodical check for this item/warehouse combination, you will get a warning message on this panel. The reason for this is that the conditions established for this item/warehouse combination indicate that it is not yet time for a stock level check. Therefore, this item/warehouse combination will not appear on the real purchase suggestion at this time. The replenishment time for the simulation is set to the replenishment time including the periodical interval.

  1. Select the Simulate purchase suggestion menu item.
  2. You access Purchase suggestion simulation. Note: This panel can also be accessed if you click Purch sim on the Work with purchase suggestions, Line panel. Complete the following fields:
    3. Item
    To view the purchase suggestion analysis for a specific item/warehouse combination, enter the item code for the combination. Note: The simulation can only be done for externally supplied ROP items, as defined in the Warehouse structure.
    Warehouse
    To view the purchase suggestion analysis for a specific item/warehouse combination, enter the warehouse for the combination.
    Extra planning days
    Enter the number of days, if you want to add days to the existing planning time. The number of days you add here will be added to the planning time shown in the header of the next panel. Note: This is a simulation. Changing extra planning days will not result in an update of the IBS Inventory Control system. It will only affect this simulation.
    Extra quantity
    Enter the percentage that you want to increase the suggested quantity by on the purchase suggestion.

    Click OK.

  3. You access Purchase suggestion simulation. This panel displays all the data used in the purchase suggestion creation for the item/warehouse combination that you selected on the previous panel. You have the following options:
    • If the selected item is a purchase type 2 item, you can click OK to look at additional purchase suggestion information.
    • You can click Display quantity calculation to view the formulas for suggested stock quantity and suggested purchase quantity.

    Exit the routine when you have finished analysing the figures.

Purchase cost simulation

The purchase cost simulation program is used to analyse the cost effect of different scenarios. The simulation will show the total cost for a certain purchase pattern. It is possible to simulate the quantity to buy, the discount received, the order cost and stock interest and evaluate the total cost. It is possible to evaluate if it is worth to purchase an extra quantity to get a discount and similar situations.

The function can be called from the menu or from the purchase suggestion line maintenance:

  • When the simulation is called from the purchase suggestion line maintenance, the values are retrieved from the purchase suggestion line.
  • When the simulation is called from the menu item, the values are retrieved from the Item file.

The following cost components are calculated:

  • Purchase value
  • The total amount paid for one year supplies
  • Cost of tied up capital
  • The total ordering and freight cost during one year
  1. Select the Simulate purchase cost menu item.
  2. You access Purchase cost simulation. Complete the following fields:
    3. Item
    Enter the item code of the item/warehouse combination for which you want to calculate simulated ROP/SST.
    Warehouse
    Enter the warehouse code of the item/warehouse combination for which you want to calculate simulated ROP/SST.

    Click OK.

  3. You access Purchase cost simulation where you do the actual purchase cost simulation. Complete the following fields:
    4. Order quantity
    Enter the order quantity to be used in the calculation.
    Annual sales
    Enter the expected annual sale quantity.
    Safety stock
    Enter the safety stock for the item.
    Purchase price
    Enter the purchase price.
    Price discount
    Enter a discount (%) that will reduce the purchase price used in the cost calculation/simulation.
    Order cost
    Enter the order cost in system currency.
    Stock interest
    Enter the stock interest.
    Landed costs
    Enter the total standard landed cost for the item/warehouse combination.

    Click OK. The system simulates the cost and displays the calculated values in the lower part of the panel. Exit the routine when you have finished analysing the figures.

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