Use the backorder tolerance quantity (BTQ) to exclude orders with unusually large quantities of the product -- even larger than exceptional sales -- from the demand calculation. This value is the maximum order quantity for the product on one order. Any order with a quantity greater than this amount is excluded from the demand calculation.
When filtering orders for the demand calculation, the system first eliminates from the demand calculation those orders with products above the BTQ, before determining whether an order qualifies as an exceptional sale. Unlike the exceptional sales inventory parameter, which changes depending on the second largest sale made in the forecast period, the BTQ is a fixed amount.
For example, Product A normally sells 1 or 2 each per month. The exceptional sales inventory parameter is set to 200% and the backorder tolerance quantity is set to 6. A contractor orders a quantity of 24 of Product A for a large job, and schedules shipments in groups of 8 every month for the next 3 months. Whether you define hits by the order (one order of 24) or the generation (3 generations of 8), the system does not consider this order when calculating demand. Furthermore, consider that to be an exceptional sale, the highest order quantity must be 200% of the second highest order quantity, AFTER eliminating orders greater than the BTQ. Therefore, any sale of Product A in a quantity over (6 / 200% = 3) 3 is considered exceptional.
Note: The following procedure is a manual process for a single product. Use the Mass Load program to enter inventory parameters to groups of products.
To set the backorder tolerance quantity for identifying exceptional quantities:
From the Maintenance menu, select Product to display the Product Maintenance window.
From the Inventory menu, select Primary Inventory Maintenance to display the Primary Inventory Maintenance dialog box.
From the Edit menu, select Forecast Parameters to display the Product Forecast Parameters dialog box.
From the File menu, select Hierarchy to display the Product Forecast Parameters dialog box.
In the Enter hierarchy branch field, enter the branch or territory ID.
Click OK to display forecast parameters for the selected branch in the Product Forecast Parameters dialog box.
In the BTQ column for each branch, type in the maximum order quantity considered normal for this product.
See Also: