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Introduction
This document provides instructions on how to set up the procedure to re-compute minimum and maximum stock levels for a number of days’ supply.
Procedure
There are two types of inventory that can be used in Optifacts, Usage and Min/Max inventory. Usage is a basic system that orders a lens each time one is used regardless of how many are actually in inventory. Min/Max manages the quantity on hand by looking at the number of days’ worth of stock instead of specific number of lenses. Minimum being the minimum number of days’ of stock to maintain in inventory, and maximum being the maximum number of days’ of stock to maintain in inventory. To determine the Min/Max levels, the system looks at the last 90 days usage as well as the usage from the same month of the previous year.
We use the configuration editor in menu: 9-1-1 and use the min/max calculation if you have order by usage or Min/Max computation set to M.
Note that this can also be controlled per-supplier in menu 9-1-3.
From the Optifacts main menu:
Type 9 - Inventory and press enter.
Type 1 - Editor Utilities and press enter.
Type 1 - General Configuration and press enter.
The Inventory General Configuration screen displays.
Field Definitions
Enter the applicable data as described below, pressing enter after each entry.
Select Blanks by Inventory Availability (Y/N)? - Blank selection based upon inventory is a simple yes/no prompt. This prompt applies to both min/max and usage ordering. When set to Yes, you can have blank selection automatically choose a lens from your second, third, fourth, or fifth supplier if the lens that would work is out of stock. An example could be having a 70 mm lens as priority one and a 75 mm lens as priority two. When out of stock on the 70 mm lens, Blank selection will pull and use the 75 mm lens, even though the Rx would cut on the 70 mm lens. You should set this to N to begin. We will change it to Y after getting your physical inventory quantities entered. Note: There are options in the price list to have your system price oversize based upon the lens diameter needed, rather than the lens diameter used when the Inventory package is installed.
- Y – Checks to see if the lenses chosen by blank selection are in stock and if not, does not select them.
N – Uses blank selection to determine the best lens for the job regardless of quantity on hand status.
Number of days between Min/Max computation - Will set the default number of days the computer will use to determine minimum and maximum levels of stock. Even though we will start with a usage based ordering system, we still want to use min/max to show us the peaks and lows of the inventory levels and when these peaks are occurring. A good value to use here is 30 days.
The number entered in this field is used in computing the average daily use of each lens SKU.
Retain history information - Can be yes, no, or received orders only. Choose Y, N, or R. This prompt applies to both min/max and usage ordering. You can toggle the system to retain history information of all orders and receipts. This logging of information can use an excessive amount of disk space. We recommend that if you wish to retain information, start with just the receipts and set the next prompt to about two or three months. If unsure of the amount disk space you have free, you can check by using the ‘Check free disk space' feature of the Management Functions menu option of the Optifacts Main Menu.
- Y – Retains a detailed history of lens usage per SKU and per job number.
N – Does not retain the history.
Number of months to retain history - Number of months to retain history is set to the number of calendar months you wish to save history information, if the above prompt was set to ‘Y’ or ‘R’. Our example above is not saving any information. You may want to check with Optifacts™ support staff about disk space requirements before setting this.
Usually one year (12 months) is used.
Order by Usage or Min/Max computation (U/M) - Can be set to ‘U’ or ‘M’. This prompt is where you select your lens ordering method. We will start by setting this to ‘U’ for usage. Even if you desire to order on a min/max system, you must first run usage mode for 90 days (recommended) before switching to min/max. This is to allow the system a period to determine best min/max usage levels. Even when ordering based upon usage, you can use min/max to show you which products you are over or under stocked on and at what point in the year or month these peaks are happening.
U – Enable the Usage Inventory system.
M – Enables the Min/Max or Perpetual Inventory system.
Number of days supply for stock computation - Will affect how many lenses are ordered based upon how many days between orders and what your usage levels have been.
This can be considered the Minimum value of Min/Max
Number of days between normal ordering cycles - Will also affect how many lenses are ordered based upon the number of day’s supply for stock computation and what your usage levels have been.
This value when added to the previous value can be considered the maximum value of Min/Max.
Use which min/max computation procedure (A-D) - Must be and default is set to ‘A’. This prompt applies to min/max ordering. You should leave this entry set to A; the procedures B-D are reserved at this time.
Note: Selecting any letter from A to D will use the same formula. A is the standard.
Average Cost Method of Costing? (Y/N) This entry affects how the inventory in stock is valued when a manufacturer changes the price of a lens. Will average your SKU costs between previous and current costs rather than assign all SKU inventory the new cost. This results in a more accurate valuation of lens inventory.
Y – Calculates an average price for the lens based on number of lenses and price paid for each.
N – Calculates Inventory Costing based on the price paid for each lens.
Blind Counts for Physicals? (Y/N) - Will not print quantity on hand when doing physical inventory.
Y – Excludes the Quantity on Hand from cycle count printed forms.
N – Includes the Quantity on Hand on cycle count printed forms.
Maintain Data for Ledger Report? (Y/N) - Will store inventory information into a separate table for the ledger report. The ledger report is a great summary report of your inventory activity including breakages, sales, etc.
Y – Maintains a summary of usage by SKU for the stock ledger report.
N – Does not keep a summary of usage by SKU for the stock ledger report.
Check Quantity on Hand and Costs? (Q/C/B/N) - At the Verify station will allow you to stop verification of lenses that have zero (0) quantity and/or zero (0) cost associated with the SKU. Start with this setting at ‘N’ to disable this feature, and then turn it on later to find SKUs that are missing costs and have no quantities.
Q – Check Quantity on Hand only. As each lens is scanned into a tray, this option checks to see that inventory shows at least one lens in stock. If the quantity on hand for the scanned lens is zero it will not allow the lens to be used until the quantity on hand is more than zero.
C – Check Costs only. Verifies that there is a cost per lens associated with the lens in inventory.
B – Check both Quantity on Hand and Costs.
N – Check neither Quantity on Hand nor Costs.
- Type E to exit.
Explanation
We maintain the date first used for each SKU on the system.
- If the date first used is less than 100 days we look at the inventory configuration for number of days between min/max calculations. We take the difference between today, the date first used and the number of days min/max that is configured. We take the number used in that time (basically the time since last min/max calculation) and create an average daily usage which we'll use below.
- If date first used is 100 days or more, but less than 365 we will count the number of days month-to-date, we'll add 30 for each of the last three months and divide that number into the number used in that time period to get the average daily usage.Note: We don't subtract out weekends or holidays. It's a simple calculation using 30 days for each month and counting each day of the month to date.
- If date first used if over 365 we add days month-to-date, 30 days for each of the last two months and 30 days for this month last year. We add usage during these same time periods and divide usage by days to get average daily usage.
- Now that we have average daily usage as calculated by one of the methods above, we multiply that number by the configured value above for number of days supply. This will give us a min value. For example, if average daily usage is 20 lenses, we'll multiply that by the 4 we have configured above to set your minimum at 80 lenses.
- We then take the average daily usage and multiply that by the number of days between ordering cycles. As configured above, we'd be multiplying the 20 used per day times the 3 days between ordering cycles to get 60. We'd add this 60 to the min to get the max of 140. So, min would be 80 and max would be 140.
If any SKU has an extremely low usage and you list it as a stocked item, we have an override to the formula that can insure that you keep at least one lens on the shelf. That can be configured to be one pair for a product that's non-distinguishable. For example, if you rarely use a special polarized single vision, but you'd like to keep it stocked, you can configure the system to insure either one lens or one pair be on the shelf at all times. Some labs prefer one lens, but some labs prefer two because orders typically come in for a pair.
Note that we don't factor in lead-time for delivery. You need to factor that into the number of days of supply for suppliers that have a significant lead time.
When orders are calculated by the system we look for any SKUs where the sum of quantity on hand plus quantity on order has dropped below the min. We'll then order up to the max. So, for example above, if you have 30 lenses on the shelf and 20 on order, the sum of 50 would be below the 80 we calculated for the minimum. We'd re-order (140 minus 50) or 90 lenses to get us back up to the maximum.
We also allow you to control any given SKU manually, so you can set that SKU to have manual min/max settings where you key in these values and we would not override these with the Optifacts min/max calculations. This is highly valuable if you have minimal usage history and know the product might be a big seller in coming days/weeks.
