(Features Predictive Analytics and DDMRP Methods)

Right Sized Inventory’s NEW Replenishment-Planning module employs Patented Predictive Analytics and Demand Driven Materials Resource Planning (DDMRP) replenishment demand-and-supply netting priority logic to suggest replenishment quantities for any stocked inventory item in any location. 

In order to describe our approach in more detail it’s important to first outline some calculation shorthand and definitions for those of you not familiar with DDMRP:

• DDMRP = demand-driven materials requirements planning

• ADD = current average actual daily demand

• ALT = current average actual [decoupled] lead time

• DTP = near-term +/- demand forecast trend percentage

• QS = qualified spike

  • Any future-demand backlog day’s demand > QST

• QST = qualified spike threshold

  • ADD + (Buffer / √ ALT) X (1 + DTP)

• AS = available stock (aka DDMRP net flow)

  • Supply – (Current + Past-Due Demand) – Future Demand QS

• Supply = On Hand + On Order

• Buffer (aka DDMRP red zone) = incremental inventory for random demand-and-supply variation, as optimized using RSI’s predictive analytics

• ROP (aka DDMRP TOY) = Reorder Point

  • TOY, Top of Yellow Zone = (ADD X ALT + Buffer) X (1 + DTP)

DDMRP demand-and-supply logic suggests replenishment when AS < TOY. Both ADD and Buffer are dynamic, being adjusted by the 1 + DTP multiplier. Replenishment quantities are determined using actual demand only and not from forecast. (An exception: A replenishment suggestion may occur or be delayed by a change in DTP.)

RSI’s predictive-analytics supply-chain simulation model optimizes the DDMRP buffer. These factors define any stocked inventory item’s buffer in a complete point-to-point supply chain for any location:

• Replenishment method

• Distribution of demand and its random-variation behavior

• Distribution of replenishment lead time LT and its random-variation behavior

• Target service level SL

• Actual SL measurement cycle SLC

• Target confidence of achieving target SL in a SLC

• Minimum reorder quantity

• Reorder multiple

• Reorder interval

• Near-term future demand trend

DDMRP suggests replenishment in this order of prioritization categories:

1. Demand Due Today + Demand Past-Due > Supply

2. Demand Due Today + Demand Past-Due > On-Hand

3. All Demand (Past-Due + Current + Backlog) > Supply

Replenishment is further prioritized within each category. As the Supply / Demand ratio decreases, priority increases, and vice-versa.

Please contact us to get a demonstration of our NEW replenishment planning module!