📦Replenishment Calculation

This documentation outlines how replenishment quantities are calculated in Bee Forecast & Replenishment. The calculations are based on several key parameters: Lead Time, Days of Stock, Lead Time Forecast, Days of Stock Forecast, and Inventory Quantities.

Parameters to Set

Lead Time

Definition: The amount of time it takes to order an item from the vendor and receive it into inventory, shown in number of days.

When setting the Lead Time parameter, consider including a safety stock time. Lead times are generally average durations and may not always be precise. Therefore, you can add a safety stock time to the estimated lead time.

For example, if the total lead time is 14 days, you can add 6 days of safety stock time, setting the minimum stock cover days to 20 days.

Days of Stock

Definition: The number of days that inventory should cover.

When setting the Days of Stock, consider how frequently you want to place orders. For example, if you want to place orders once a month, you can set Days of Stock to 30 days

When you change the Lead Time and Days of Stock parameter on Settings page, lead time forecasts, days of stock forecasts and replenishment quantities are updated in real time on Replenishment page.

Forecast Calculations

Based on the set Lead Time and Days of Stock parameters, the Lead Time Forecast and Days of Stock Forecast values are calculated. You can review how the Daily Forecast is calculated on this page.

Lead Time Forecast

Definition: The number of units that Bee Forecast & Replenishment estimates will be needed during the specified lead time.

Formula: Lead Time Forecast = Daily Forecast * Lead Time

Days of Stock Forecast

Definition: The number of units that Bee Forecast & Replenishment estimates will be needed during the specified days of stock.

Formula: Days of Stock Forecast = Daily Forecast * Days of Stock

Replenishment Calculation

Replenishment is based on forecasted demand and indicates how many more units are needed to meet customer demand.

Considerations:

• Inventory quantity

• On order or transfer quantities in Shopify (incoming inventory)

• Continued selling during the lead time (lead time forecast)

• Units needed to meet demand during the days of stock (days of stock forecast)

Formulas:

1. Lead Time Closing Stock : Max (0, (Inventory Quantity + Incoming Inventory) - Lead Time Forecast)

2. Replenishment Quantity : Days of Stock Forecast - Lead Time Closing Stock

Example Calculation

To illustrate the replenishment calculation, let's consider an example:

• Daily Forecast: 2 units

• Lead Time: 7 days

• Days of Stock: 30 days

• Inventory Quantity: 10 units

• Incoming Inventory: 5 units

Step-by-Step Calculation

1. Lead Time Forecast: Lead Time Forecast = 2 units/day * 7 days = 14 units

2. Days of Stock Forecast: Days of Stock Forecast = 2 units/day * 30 days = 60 units

3. Lead Time Closing Stock: Max (0, (10 units + 5 units) - 14 units) Lead Time Closing Stock = Max (0, 15 units - 14 units) = 1 unit

4. Replenishment Quantity: 60 units - 1 unit = 59 units

Thus, the replenishment quantity needed to meet customer demand is 59 units.

This calculation method ensures that you always have the right amount of inventory to meet customer demand while avoiding overstocking or stockouts.

👋 If you have a different need for a forecast, please don't hesitate to contact us! We are always here to help! You can say hello with live chat on merchbees.com or send an email to [e-mail].