Replenishment Count Types

CDE.

Periodic Automated Replenishment (PAR) is a process of automatic inventory replenishment at a predefined frequency. PAR is commonly used in inventory management systems to maintain optimal inventory levels by monitoring inventory levels and automatically replenishing stock when inventory levels fall below a certain threshold.

PAR uses various count types to generate replenishment requests for inventory items. Here are the explanations of the three replenishment count types mentioned in the question:

A. Order Economic Quantity (EQQ): This count type generates a replenishment request for the calculated quantities based on inventory policies to maintain the PAR quantity. The inventory policies consider various factors like lead time, demand variability, and order costs to determine the optimal order quantity. The EQQ count type aims to balance the holding costs and order costs to minimize the total inventory cost.

B. Reorder Point: This count type generates a replenishment request for the order quantity based on days of cover for the item lead time. The reorder point is the inventory level at which the replenishment request is generated. The days of cover is the expected number of days the inventory will last, given the average daily usage and the lead time required to replenish the inventory. The reorder point is calculated as the lead time demand plus a safety stock to cover any variability in demand or lead time.

C. Order Quantity: This count type generates a replenishment request for the order quantity entered for the replenishment count. The order quantity is the predetermined quantity that needs to be ordered to maintain the PAR quantity. This count type is used when the order quantity is fixed, and the same quantity needs to be ordered every time the replenishment count is generated.

D. Order RAR: This count type generates a replenishment requisition for the RAR-level quantity. RAR stands for Reorder After Receipt, which means that the inventory is replenished after the items are received. This count type is useful when the lead time for the inventory items is unpredictable, and it is difficult to determine the reorder point or order quantity.

E. On-hand Quantity: This count type generates a replenishment requisition for the difference between the on-hand quantity and the RAR-level. This count type is useful when the inventory levels are monitored continuously, and the inventory is replenished as soon as the on-hand quantity falls below the RAR-level.

In summary, the PAR process uses various replenishment count types to generate replenishment requests based on different factors like inventory policies, lead time, demand variability, and order costs. The choice of the count type depends on the specific inventory management requirements and the characteristics of the inventory items.