Customer sales of 1 Pcs in last 10 days and as per DDMRP past method it should be 1/10=0.1 Average daily usage, but system is calculating Average daily usage as 1.
So they get 5 min and 24 max, by following formula, it's too much for the customer to purchase, so they think we may have an option to make the ADU is calculated base actual usage.
Min is calculated by following formula, so it 1(Average daily usage)*5(purchase lead time)*0.8(Lead time factor) = 4, 4(Red base) * 0.3(Variability factor) = 1.2, so the Min = 4+1.2 ≈ 5.
- Red base = ADU × Decoupled lead time × Lead time factor
- Red safety = Red base × Variability factor
- Red zone = Red base + Red safety
The Record point is Min+Yellow zone, Yellow Formula as following, so the Record point = 5 +1(Average daily usage)*5(purchase lead time) = 10
- Yellow zone = Average daily usage (ADU) × Decoupled lead time
The Max = the record point + Green zone, The green zone is calculated as the maximum result of the following three equations: so the Max = 10 + 14(Max) = 24
- Minimum order quantity 0
- ADU × Order cycle 1*14
- ADU × Decoupled lead time × Lead time factor 1*5*0.8
Comments
Not sure if further arguments are considered, but I'll try. Effectively, this decision means that products with low ADU in some period, cannot fully be covered by the functionality, since, as in example above, the ADU my be overestimated by a factor of 10, with is a huge error factor. This does not only affect products with stable low demand, but also seasonal items with low demand at any period of the year: You'll have to manually adjust min, max and reorder points for those products at those periods of the year - which means a lot of manual control and overriding in general, contradicting the logic of automating the min/max/reorder calculation based on the current and predicted sales.The idea is not to have decimals on min/max/reorder for items with integer units of measures (those have to be integer, or whatever is defined on the UoM), but to have proper precision on the calculatory value of ADU. That is exactly how calculation of Safety Stock is implemented: Decimal values for "Average issues per month" and "Standard deviation of issues per month", but then rounded to the proper decimal precision for the suggested minimum values.
Category: Planning
Administrator on 10/31/2025 3:04:20 PM
Thank you very much for your input. The reason for your result is that Average Daily Usage is rounded up according to the decimal precision set on the related inventory UoM. Therefore if inventory UoM is set to be the one with 0 decimal precision - average daily usage won't support decimals either (f.ex. with standard ea set as inventory units). In order to achieve your result, you need to change the decimal precision of the inventory unit applied. We do not have any plans to change this design.
The Supply Chain Planning Team