The replenishment Method from a Stock Item’s Inventory Replenishment tab is what determines what calculation is done when inventory levels reach or drop below the set Reorder Point.
Fixed Reorder Qty method: The EOQ is recommended. No other calculations are done.
Min./Max method:
- Calculate the difference between the Max and current stock position (Qty on Hand + Qty on Supply - Qty on Demand) so as to order enough to exactly reach the maximum replenishment amount
- Increase that value to the Minimum order Quantity, if less
- Increase that value to the next round Lot size, if applicable
- Decrease that value to the Maximum Order Quantity, if greater
So in your example, hitting a reorder point of 10 on a stock item with a minimum order of 50 and a Max Replenishment of 20 will go through the following steps (assuming the Min./Max replenishment method and no other factors):
- 20(max) - 10(current) = 10, so start with 10
- 10 < 50(min order), so increase to 50
- No lots specified, still 50
- No maximum order quantity specified, so still 50
EOQ does not factor into this calculation. If you were to change the replenishment method to Fixed Order Quantity, then the calculation that would happen when you reached the reorder point is:
- EOQ
The final quantity from the calculation is what gets populated by default into the Prepare Replenishment (IN508000)’s Qty to Process column. Note that this field can be edited afterwards without regard for any of the replenishment parameters.
Most of this was found through my own extensive testing as we tried to wrap our heads around which parameters did what. I wrote up a document on how the IN508000 and IN508500 appear to work, if you’re interested in some unofficial documentation.
