DRP - Consolidated Purchase FAQ

Question: What is the purpose of using the Consolidated Purchase option in Summary DRP Management?

Answer: This option enables you to include purchasing data for multiple locations in forecasting calculations to more accurately satisfy customer demand.

Example Product ABC is set up for two warehouses with a purchase replenishment path for the West Coast warehouse and a transfer replenishment path for the East Coast warehouse (transferring from the West Coast warehouse). Projected ending inventory of product ABC at the end of August is 2,000 units for the West Coast warehouse and 10,000 units for the East Coast warehouse. September’s forecast is 5,000 for the West Coast warehouse and 1,000 for the East Coast warehouse, and both use a safety stock method of 50% of the following month’s demand. Both the West Coast warehouse and the East Coast warehouse are set up in DRP Region Canada (a DRP region is used only to define the locations that can be consolidated together). The following table displays the calculations for using the Location Purchase option and using the Consolidated Purchase option.

	Location Purchase Results				Consolidated Results
	West Coast Warehouse		East Coast Warehouse		DRP Region Canada
	August	September	August	September	August	September
Expected Demand		5,000		1,000		6,000
Projected Ending Inventory	2,000		10,000		12,000
Desired Inventory	7,500		1,500		9,000
Actual Planned Receipt	5,500		0		0

As you can see, if you did not use the Consolidated Purchase option, 5,500 would be recommended for the actual planned receipt quantity even though there is enough inventory to satisfy the sum of September’s demand and the safety stock quantity.

The settings for product location’s ABC and DEF are as follows:

	West Coast Warehouse		East Coast Warehouse
Product	Primary Replenishment Path	Replenishment Location	Primary Replenishment Path	Replenishment Location
ABC	Purchase		Transfer	West Coast
DEF	Transfer	East Coast	Purchase

In Summary DRP Management, using the Consolidated Purchase option, the following scenarios can occur:

Scenario 1

Selection

Comments

A specific DRP region

For example, Canada

Primary location

If you enter a specific location (which must be a location in the selected DRP region), then you are designating the receiving location for the purchase order that will be created. The system creates one purchase order for the one receiving location.

If you do not enter a location, then the system determines the receiving location based on the first location it finds that has a Purchase Primary Replenishment Path. The system creates multiple purchase orders with different receiving locations. For this example, the following is true:

Product ABC's receiving location is the West Coast warehouse.
Product DEF's receiving location is the East Coast warehouse.

Scenario 2

Selection	Comments
All DRP Regions
Primary Location	This field is disabled because a specific location can only be part of a specific DRP region.

When the Consolidated Purchase option is selected, some calculations rely on the receiving location (or receiving locations), which could legitimately change the consolidated quantities depending on the receiving location that is used. For example:

Product ABC	West Coast Warehouse	East Coast Warehouse
Buying Method's safety stock method	50% of next month's demand	75% of next month's demand
Minimum purchase quantity	5000	2500
Purchase increment	100	50

Because DRP relies on the above fields for calculations, and none of these fields are maintained for the DRP region, the software selects the values based on the receiving location. So, in the above example, if the West Coast warehouse is the receiving location, there may be different numbers than if the East Coast warehouse is the receiving location.