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Administrator Guide
Last Updated: 2024-09-20
Steps: Set Up Inventory Reorder Points

Steps: Set Up Inventory Reorder Points

Security:
Set Up: Inventory
 domain in the Inventory functional area.
You can determine reorder points for inventory items by calculating average daily usage (ADU) and preferred supplier lead time (SLT) values, using data from past transactions. When you set item reorder points, you can maintain optimal inventory quantities and avoid stock shortages and overstocking.
Example: You calculate the ADU for exam gloves to determine the stock levels required to ensure a consistent supply of the item. You also calculate the SLT for the gloves to determine a reorder point that maintains stock levels.
We recommend that you use these tasks in conjunction when determining ADU and SLT values:
  • Calculate Inventory Average Daily Usage
  • Calculate Preferred Supplier Lead Time
  1. Access the
    Calculate Inventory Average Daily Usage
     task.
  2. Complete the
    Average Daily Usage Criteria
     task:
    Option Description
    Previous Horizon Days
    Enter the number of days going back from yesterday to use in your item usage calculation. Enter the number of days for Workday to use to calculate the ADU of an item.
    This only includes days since the first issuance of the item. Example: You set the previous horizon days to 90, but the item was first issued 10 days ago. The calculation only includes 10 days.
    Variance Exclusion %
    To account for fluctuations in item usage, enter a percentage that varies from the true ADU of an item.
    Example: The ADU value of an item is 100 and you enter a variance exclusion of 20%. Workday excludes all ADU values over 120 and below 80 from its calculation. The specified percentage prevents fluctuations from affecting the ADU value of the item.
  3. Access the
    Calculate Preferred Supplier Lead Time
     task.
  4. On the
    Calculate Preferred Supplier Lead Time Criteria
     tab, enter a
    Previous Horizon Days
     value.
Workday populates the ADU and SLT values in these fields on the
Edit Purchase Item
 task:
  • Average Daily Usage (Base)
  • Preferred Supplier Lead Time (Days)
When you run these tasks, Workday overrides the ADU and SLT values manually entered on the
Create Purchase Item
 task:
  • Calculate Inventory Average Daily Usage
  • Calculated Preferred Supplier Lead Time
View items that need immediate attention on the
Inventory Items Below Reorder Point Quantity
 report.
Use the
Replenishment Optimization
 report to view replenishment details by inventory site and purchase item.