Reorder items and forecast: is it the right thing to have both together?


Forecast are used to prevent planning of any new demands coming. But, is it meaningful to use forecast with reorder point items? I would say no, just what I think. I am saying this because the reorder point is calculated from the safety stock + average demand during lead time. Thus, the reorder point level intrinsctly have a forecast on what would be the demand (the average). Thus, it is not meaningful to include forecast when reorder point is used

Comments (2)

  1. RedFoxUA says:

    I think it is possible, if release at least we have:

    – we need in any cases safety stock, but without average demand..

    – "weighting coefficients" for several periods.. (instead of "average demand")

    P.S. With some correct we have possibility to have it in NAV..

  2. What I tried to cover here is from a pure reorder policy concept. If this is the case, I would still say you should not use forecast since reorder concept (not NAV concept but a planning concept) has to be always linked to average demand. Safety stock as well since it is calculated through a standard formula based on the uncertainty of meeting the demand (confidence).

    So, if this is about a customization, I am fine. But, then I would say we should be cautious when talking about reorder item since this won't be the case anymore. As I believe, you are trying to achieve a Fixed Reorder Period policy, correct? Here, we would like to reorder in given periods while Fixed reorder quantity is based on stock level which need to be consistent with demand profile.

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