Welcome,

    In Issues 82 and Issue 83 we have explained that there are two different ways to calculate safety stock, we called them the simple approach and the historical value approach.  Then in Issue 84 we compared the 2 ways and show how using the historical value approach can cost a lot less then using the simple approach. This will be the first issue of two that starts to explain how one commercially available food software solution can help calculate safety stock and your reorder point.
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Paul Hernandez-Cuebas
Editor


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October 31, 2006
Volume 2 Issue 85

Reordering on a Food Oriented Software Program

   We have seen in the last 3 issues how confusion calculating safety stock can be but we have also seen that it is necessary to archive better customer service. As we saw in Issue 84 using the simple approach, that is a lot easier to use, can cost you a lot more money. In this issue we will be focusing on how one commercially available food software solution can track your information and give you exactly how much to reorder with only needing the products lead time, its reorder days and its adjusted reorder point (that we described in Issues 82).

  The Screen shot above shows a current inventory snapshot of exactly how much product you have in stock, the lead time of the product, reorder days, and reorder quantity (which we called the adjusted reorder point but it’s the same thing). You also see that the sales history tab is highlighted. Since you need to put in your adjusted reorder point it would be very beneficial to be able to see your sales history. On the next screen shot you can see the sales history of the product.

   As we said in Issue 83 when calculating the safety stock using the historical value approach you need to know all of these numbers. The computer system will calculate and track all these amounts for you.  What makes this software package a true sophisticated FOOD software system is the ability for the software to be able to suggest how much you should reorder. Now let’s say for example that it has been 7 days since you last reordered and it is time to place another order.

   All you have to do is go to the purchase management screen in the software, pick the vender you need to buy from, and choose the “Sugg PO” tab. The software will look at the Reorder point or “par” and then make the necessary calculation shown below.

   The software sees your on hand is blow your reorder value and then subtracts the in stock value of 2,518.75 cases of sausage from the Reorder Point of 3,000 cases and suggests that you need to reorder 481 cases of your Italian sausage. Although you have to initially figure out how much safety stock you want to carry and calculate your adjusted reorder point the food software package can help you remember to order. In next’s weeks part two of this issue we will get a little more complicated and explain how this software calculates all of these numbers to get your suggested reorder amount.         

THE CORRECT SOFTWARE REDUCES COSTS

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