Module: Categorization according to sales regularity

Executive summary

This categorization sets to divide the items into the following categories:

  • dead stock,
  • sporadic items,
  • non-sporadic items (cf. items sold regularly).

These types of items are then treated with different degree of importance.

If the Supply management module is turned on, the products are then managed in different ways:

  • Dead stock and sporadic items are governed only by means of base stock (see the Module: Base stock): with these items, it is not possible to predict (with reasonable probability) the sale.
  • Non-sporadic products are governed by the computed forecast sales with the help of base stock (see the Module: Base stock) and safety stocks (see the Module: Safety stock).

Functional description

Computing the categorization

The basis for computation is to establish the number of month (from the defined period; with the default being 12 months) with a sale of a product. The actual amount of sales is irrelevant, so long there occurred at least one event of sale; equally irrelevant is the quantity of the sold products. The only decisive indicator is whether there was (or not) at least a single sale of the given product.

Then, the number is converted into a fraction X/12, where X is the number of months with (at least a single) sale in the last 12 months.

In case there are no data for the last 12 months (if we, for instance, deal with a new product) a relative value is computed. If, say, the product was sold only in the last 6 months and it was sold in 4 of them, the segment 4/6 will be recalculated to 8/12.

If the module Reverse distribution between warehouses is active, then the central warehouse gets ascribed not only the sales of (the categories of) products sold from there (the central warehouse), but also sales realized from the subordinate warehouses.

If the module Production is active, the raw material gets a special treatment: not only the categories of sale of the raw material (if there are any) are computed, but in addition, sales of the final products are summed up and added to the category of the raw material.

In the basic version of STOCK

  • dead stock is a product with segment 3/12 and lower,
  • sporadic product is a product with segments in the range 4/12 – 7/12,
  • non-sporadic product is a product with segments in the range 8/12 – 12/12.

All seasonal products (identified in the Module seasonality) are automatically considered as non-sporadic: their management requires seasonal forecast. Using ordering levels (cf. a certain quantity of a product is always available at a warehouse) doesn’t lend itself easily to manage these products.