Using the Item Warehouse Entry (IWE) screen, a warehouse manager specifies controls that help him or her to know when to reorder an item. Based on these controls, the NCAS notifies the warehouse manager when recorded inventory levels for an item fall below required levels. The NCAS uses one of the following inventory controls to calculate the reorder point for inventory items:

• Order Point (O): The order point is the quantity specified by the warehouse manager as the point at which the item should be reordered. If the available stock level reaches or falls below the order point quantity, the NCAS notifies the warehouse manager to reorder the item via the Replenishment Action Report (RRACT).

When the inventory control is O, the warehouse manager must also specify the quantity of stock to be reordered. The warehouse manager can use either a fixed order quantity or an economic order quantity to specify the quantity of stock to be reordered.

The fixed order quantity requires the warehouse manager to specify the amount of the item that should be ordered each time the available stock level falls to the order point. The fixed order quantity can be of two types: absolute or time supply. With the absolute quantity, the warehouse manager specifies a specific number of items to be ordered. With the time supply quantity, the order quantity is specified as a number of days’ supply. If the order quantity is specified in days’ supply, the NCAS calculates the quantity based upon the item’s demand history.

If the warehouse manager selects the economic (calculated) order quantity, the NCAS calculates the optimal order quantity for the item based on minimizing the acquisition and carrying costs of the item.
 
• Computed Order Point (C): The computed order point control is similar to the order point control. However, instead of using a fixed order point to determine when an item should be reordered, the NCAS uses the safety stock level, lead time, and forecasted monthly demand to calculate the order point. The safety stock level is the amount of cushion in units or in time for the item at the reorder point. The amount of cushion in time refers to the number of days that the current on-hand supply of an item will last. The lead time is the number of days from the time a purchase order is created until the goods are received at the warehouse.

If the NCAS determines that an item with the computed order point control needs to be replenished, the item will appear on the Replenishment Action Report (RRACT).
 

• Minimum/Maximum (M): The minimum/maximum control specifies the point at which an item should be reordered (minimum stocking level) and a reorder quantity ceiling (maximum stocking level). The NCAS uses the order point (minimum stocking level), inventory standard (maximum stocking level), and order multiple to determine the order quantity.
• When inventory levels for an item fall below the minimum, as designated by the value in the ORDER POINT field, the NCAS will notify the warehouse manager that replenishment should be initiated.
• The inventory standard is the ceiling or maximum inventory level permitted for that item at that warehouse. In other words, replenishment should not exceed the inventory standard.
• The order multiple is the multiple in which an order for an item should be placed. For example, a vendor only sells scissors by the dozen. Therefore, the buyer may only buy the scissors in multiples of 12. The buyer may buy 12, 24, 36, or 48 (and so on) pairs of scissors.

When the minimum/maximum control is selected, the NCAS does not allow an order that causes inventory to exceed the established inventory standard or maximum quantity. This is known as a maximum exception. In this case, the warehouse manager receives a warning message from the system. If this message is ignored, the order in question will be rerouted to a special warehouse approver to get approval to exceed the inventory standard.

In contrast, a minimum exception occurs when the inventory level of an item drops to or below the order point. When this occurs, the item will appear on the Replenishment Action Report (RRACT). This report notifies the warehouse manager that it is time to replenish the item.
 

• External (E): When the external control is utilized, the NCAS does not advise the warehouse manager when to initiate replenishment. The warehouse manager must complete this function manually. The warehouse manager may use some method external to the NCAS to determine when he or she should initiate replenishment of the item.