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Global purchasing

By default the planning algorithm will trigger a replenishment for a buffer as soon as its inventory level drops below the safety stock. This logic is based on the local needs at the buffer.

In a distribution network with inventory at multiple locations, considering the inventory across the entire network for the purchasing decisions can significantly reduce the inventory and obsolesence costs.

Using the global purchase flag we can prevent a new purchase order to be created when sufficient inventory is still available at other locations in the network. And it directs demands to locations that have available inventory.

This feature has 2 specific planning behavior:

  • Generation of a new purchase order for an item is blocked when the total inventory of the item across all locations is above the sum of the safety stock of the item across all locations.
  • By default frePPLe only plans a demand on the location where it is pointing at.
    When the global_purchase flag for the item is set, the planning algorithm will first plan at the demand location. If the demand can’t be satisfied from that location the algorithm will try to satisfy the demand from other locations that have the item on stock. Candidate locations are sorted in descending order by the amount inventory above the safety stock level they carry of the item.

Example

Imagine a distribution network with inventory at a number of warehouses across the country for a particular item:

Location Inventory Safety stock
WH1 100 10
WH2 0 10
WH3 20 10

A sales order from a customer close to WH2 can easily be shipped from WH1 instead. With the global_purchase flag set, we will automatically redirect the demand to WH1 (which has highest inventory above its safety stock) and WH3.

Any new purchase orders for this item are deplayed until the total inventory across all location drops below 30 = 10 + 10 + 10.