Optimal time to order
The question of when and to what extent goods and merchandise need to be ordered is central to the functioning of a warehouse. Within operational scheduling, it is not just the order quantity that is important, but also determining the right time to order. But how is an optimal order time defined and how can it be calculated? First of all, it should be emphasized that "optimal" in this context means that goods arrive in the warehouse at the latest when the minimum quantity required for production or delivery is reached or not reached.
In short, the optimum order time is the moment at which an order must be placed at the latest in order to avoid delays or even production stoppages. However, as different lead or procurement times have to be taken into account depending on suppliers and items, the use of a modern merchandise management system is recommended.
Types for determining the optimum order time
A basic distinction is made between ordering procedures that are relevant to quantities or deadlines, i.e. between the reorder point procedure and the order frequency procedure.
- Order point procedure
The reorder point method is a principle for determining the optimum time to order based on the available stock. Essentially, this means that orders are placed when there are still enough goods in stock to be able to produce or deliver as usual during the procurement period. Always provided that the previously defined safety stock is not touched. On the one hand, this can be done on the basis of fixed order points, for example periodically at certain times of the year - and then without a review during the year. Consistent demand and reliable replenishment times would be important here.
On the other hand, there is the moving order point, where an automatic check is always carried out after an item is removed to determine whether it has reached or fallen below the limit values. This means that orders are placed exactly when they are actually needed. In practice, this variant is mainly used to determine the optimum time to order.
- Order rhythm procedure
In contrast to the moving order time described above, the order frequency method involves placing an order on the basis of fixed intervals. This means that testing does not take place after each removal, but in predefined control cycles (individually defined intervals). It is important to note that the ordering time occurs when the stock is sufficient to ensure that there are enough goods available during the replenishment period plus the period until the next control cycle date - without touching the safety stock.
