Purchase Order ( PO ) Forecasting
PO Forecasting uses a pre-defined formula for calculating the Forecasted Reorder Quantity (FRQ).
The formula uses two variables (Evaluated Period and Forecasted Period, both in # of DAYS) which user will need to supply the value every time PO is created.
Formula: ( Unit Sales from (Evaluated Period) * ( (Forecasted Period) / (Evaluated Period) ) ) – (On hand Quantity) = Forecasted Reorder Quantity.
Evaluated Period = 56 days
Unit Sales from Evaluated Period (calculated) = 50 units
Forecasted Period = 21 days
On hand Quantity = 12 units.
( Unit Sales from (EP) * ( (FP) / (EP) ) ) – (OH) = FRQ
( 50 * (21/56) ) – 12 = 6.75 --------- Round up ------> 7
7 is now the reorder quantity for this item.