Chapter 4: Supply Planning

CHAPTER 4: SUPPLY PLANNING

Objectives
The objectives are:

• Describe the concepts of the Overflow Level.

• Explain how to use the overflow feature in a supply planning
scenario.

Introduction
Microsoft Dynamics® NAV 2009 Service Pack 1 (SP1) introduces a warning to
help avoid superfluous supply when changes in demand and supply occur outside
the given time bucket.

A warning is displayed when superfluous supply causes the projected inventory

to exceed the highest projected inventory in an ideal supply plan. This is defined
as the Overflow Level. The warning message displays the Overflow Level that
the planner must adjust to if he or she wants to avoid the superfluous supply.

Supply Planning describes how the Overflow Level is calculated and how to use
the feature to help keep your inventory costs down to a minimum.

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Planning with Overflow Levels

When you use Maximum Qty. and Fixed Reorder Qty., the planning system
focuses on the projected inventory in the given time-bucket only. This means that
the planning system may suggest superfluous supply when negative demand or
positive supply changes occur outside the given time bucket.

If, therefore, a superfluous supply is suggested, the planning system calculates

which quantity the supply must be decreased to (or deleted) to avoid the
superfluous supply. This quantity is called the Overflow Level.

FIGURE 4.1 OVERFLOW LEVEL ACTIONS

The overflow is communicated as a planning line with a Change Qty. (decrease)

or Cancel action and the following warning message (where xx is a number):

The projected inventory [ xx] is higher than the overflow level [xx] on the Due
Date.

Overflow Level Calculation

The Overflow Level is calculated in different ways , depending on the planning
setup. There are two methods of calculation:

• Maximum Qty. reordering policy

• Fixed Reordering policy

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 Chapter 4: Supply Planning

NOTE: If Order Multiple and Minimum Order Quantity values exist, the system
will adjust the Overflow Level for both Maximum Qty. and Fixed Reorder Qty.
reordering policies.

Maximum Qty. Reordering Policy

When the reordering policy is Maximum Qty, the Overflow Level equals
Maximum Inventory

NOTE: If a minimum order quantity exists, then it will be added as follows:

Overflow level = Maximum Inventory + Minimum Order Quantity

Fixed Reorder Qty. Reordering Policy

When the reordering policy is Fixed Reorder Qty., the Overflow level equals
Reorder Quantity plus Reorder Point.

NOTE: If the minimum order quantity is higher than the reorder point, then it
will replace as follows:

Overflow Level = Reorder Quantity + Minimum Order Quantity

Planning Line with the Overflow Warning

When an existing supply causes the projected inventory to be higher than the
Overflow Level at the end of a time bucket, a planning line is created. To warn
about the potential superfluous supply, the planning line has a warning message,
the Accept Action Message field is clear, and the action message is either
Cancel or Change Qty.

Planning Line Quantity

The planning line quantity is calculated as follows:

Planning Line Quantity = Current Supply Quantity - (Projected Inventory -

Overflow Level)

NOTE: As with all warning lines, any maximum/minimum order quantity or

order multiple will be ignored.

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Action Message Type

If the planning line quantity is higher than zero, then the action message is
Change Qty.

If the planning line quantity is equal to or below zero, then the action message is
Cancel.

Warning Message
If there is an overflow, the Untracked Planning Elements page displays a
warning message that has the following information:

• The projected inventory level that triggered the warning.

• The calculated Overflow Level.
• The due date of the supply event.

Example:

"The projected inventory 120 is higher than the Overflow Level 60 on 28-01-11"

NOTE: A line will be included in the overflow warning message if the purchase
order has a status of Released.

An overflow warning message will not be created if the purchase order line is
received, or has a higher status.

Scenario
In this scenario, a customer changes a sales order from 70 to 40 pieces between
two planning runs.

The overflow feature sets in to reduce the purchase that was suggested for the
original sales quantity.

Item Setup
The item's inventory parameters are set up as shown in the following table.

Field Value
Reordering Policy Maximum Qty.
Maximum Order Quantity 100
Reorder Point 50
Inventory 80

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Situation Before Sales Decrease

The information at the time of the original sales order is shown in the following
table.

Event Change Qty. Projected Inventory

Day one 80
Sales order -70 10
End of time bucket 10
Suggest new purchase order +90 100

Situation After Sales Decrease

The information at the time of the reduction of the sales order is shown in the
following table.

Event Change Qty. Projected Inventory

Day 1 80
Change of sales order -40 40
Purchase order +90 130
End of time bucket 130
Suggest to decrease purchase order -30 100

Resulting Planning Lines

One planning line (warning) of the type Change Qty. is created to reduce the
purchase with 30, from 90 to 60.

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This is to target the projected inventory of 100, in accordance with the Overflow
Level.

FIGURE 4.2 INVENTORY PROJECTIONS BEFORE AND AFTER THE SALES

DECREASE

NOTE: Without the overflow feature, no warning is created if the projected

inventory level is greater than maximum inventory. This can cause a superfluous
supply of 30 pieces.

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 Chapter 4: Supply Planning

Lab 4.1 - Use the Overflow Level in Supply Planning

This lab will show how to provoke, and act upon, the Overflow Level warning
message when a sales order quantity is reduced after supply planning has
occurred and a purchase order exists.

Scenario

By using the Production Planner profile in the role tailored client, you will create
a sales order for the customer Cannon Group PLC, for 190 tires (item 1160), for
shipment 15 February 2011.

You will then calculate a Regenerative Plan to generate a purchase order that will
fulfill the sales order and other inventory requirements.

Later, the customer calls to reduce the sales order to only 90 tires.

You will reduce the sales order according to the customer's wishes and
recalculate the Regenerative Plan for item 1160. You will then act on the
overflow warning message to reduce the purchase order accordingly.

This lab consists of the following exercises:

• Update the default role center.

• Update Item 1160 - Tire.
• Create a sales order.
• Calculate the Regenerative Plan.
• Create the purchase order and reduce the sales order.
• Recalculate the Regenerative Plan.
• Update the purchase order

Challenge Yourself: Update the Default Role Center

Update the RoleTailored Client profile to Production Planner, and restart
Microsoft Dynamics NAV.

Need a Little Help?

1. Open Departments, Administration, RoleTailored Client, and

Profiles to find the RoleTailored Profiles.
2. Restart Microsoft Dynamics NAV to enforce the updated role center
profile.

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Step by Step: Update the Default Role Center

1. Open Departments, Administration, RoleTailored Client, and

Profiles, and then double-click the PRODUCTION PLANNER
profile.
2. Select the Default Role Center check box, and then click OK.
3. Close and reopen Microsoft Dynamics NAV.

Challenge Yourself: Update Item 1160 - Tire

Update Item 1160 with the following settings:

Field Name Value

Inventory 200
Reordering Policy Maximum Qty.
Reorder Cycle 1D
Safety Stock Quantity 0
Reorder Point 150
Maximum Inventory 500
Minimum Order Quantity 0
Maximum Order Quantity 0
Order Multiple 0

Need a Little Help?

Open the Items Card by clicking Home and then Items and expand the
Planning tab to update the fields.

Step by Step: Update Item 1160 - Tire

1. Open Home and then Items.

2. Double-click item 1160 to open the Item Card, and verify that the
Inventory field contains 200.
3. Click the arrow on the Planning tab to open it.
4. Select Maximum Qty. in the Reordering Policy field.
5. Type "1D" in the Reorder Cycle field.
6. Clear the Safety Stock Quantity field.
7. Type "150" in the Reorder Point field.
8. Type "500" in the Maximum Inventory field.

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9. Clear the Minimum Order Quantity field.

10. Clear the Maximum Order Quantity field.
11. Clear the Order Multiple field.
12. Click OK to close the Item Card.

Challenge Yourself: Create a Sales Order

Use the information in the following table to create the sales order:

Field Name Value

Sell-to Customer No. 10000
Shipment Date 15 Feb 2011
Type Item
Item No. 1160
Location Code clear
Quantity 190

Need a Little Help?

To create a sales order, open Home and then Sales Orders.

Step by Step: Create a Sales Order

1. Click Home and then Sales Orders, and then click New to create a
new sales order.
2. Select 10000 in the Sell-to Customer No. field.
3. Open the Shipping tab, and then set the Shipment Date field to 15
Feb 2011.
4. In the Lines section, select Item in the Type field.
5. Select 1160 in the No. field.
6. Tab to the Location Code field and delete the content.
7. Tab to the Quantity field and type 190.
8. Close OK to save and close the sales order.

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Challenge Yourself: Calculate the Regenerative Plan

Calculate a Regenerative Plan, by using the values in the following table for the
Planning Worksheet.

Field Value
MPS Selected
MPR Selected
Starting Date Today's Date
Ending Date 31 Dec 2011
Item 1160

Need a Little Help?

• To perform supply planning click Role Center and then Edit

Planning Worksheet.
• Click Calculate Regenerative Plan, and then select the appropriate
fields before you click OK.

Step by Step: Calculate the Regenerative Plan

1. Click Role Center and then Edit Planning Worksheet.

2. Click Calculate Regenerative Plan.
3. Set Starting Date to today's date.

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4. Set Ending Date to 31 Dec 2011.

5. In the Show results section, select item 1160 in the Enter a value
field next to the No. is fields. See the following screen shot for an
example:

FIGURE 4.3 CALCULATION OF THE REGENERATIVE PLAN

6. Click OK to calculate the plan.

7. Verify that one action message line appears, where the fields have
the following values:

Field Value
No. 1160
Quantity 490
Ref. Order Type Purchase

Challenge Yourself: Create the Purchase Order and

Reduce the Sales Order

1. Create the purchase order that is suggested in the plan.

2. Reduce the sales order quantity to 90.

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Need a Little Help?

1. Create the purchase order by clicking Carry Out Action Message,

and selecting Make Purch. Orders.
2. Access the sales order to reduce the quantity by opening the Item
Card and using the link next to the Qty. on the Sales Order field.

Step by Step: Create the Purchase Order and Reduce the

Sales Order
To create the suggested purchase order, follow these steps:

1. Make sure that the Accept Action Message check box is selected for
the purchase order.
2. Click Carry Out Action Message.
3. Select Make Purch. Orders in the Purchase Order field of the
Carry Out Action Msg. - Plan page.
4. Click OK to create the purchase order.
5. Verify that the Planning Worksheet page is now clear of action
messages.
6. Close the Planning Worksheet page.

To reduce the sales order, follow these steps:

1. Click Home and then Items, and then double-click item 1160 to
open the Item Card.
2. Click the link next to the Qty. on the Sales Order field to open the
sales order that you created earlier.
3. Click Show document in the Sales Lines page to open the sales
order for editing.
4. Update the Quantity field to 90, and then click OK to close the sales
order.
5. Close the Sales Lines page, and then close the Item Card.

Challenge Yourself: Recalculate the Regenerative Pan

Perform the Regenerative Plan again, with the same values as earlier and
examine the Overflow Warning message.

Need a Little Help?

Most fields will be completed for you when you rerun the Regenerative Plan.

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Step by Step: Recalculate the Regenerative Plan

To recalculate the Regenerative Plan, follow these steps:

1. Click Role Center and then Edit Planning Worksheet, and then
click Calculate Regenerative Plan.
The remaining fields do not have to be updated, because they have
the same values as the previous plan that you calculated.
2. Click OK to calculate the plan.
3. Verify that one warning message line appears, where the fields
appear as follows:

Field Value
Warning Attention
No. 1160
Action Message Change Qty.
Original Quantity 490
Quantity 390
Ref. Order Type Purchase

4. Click the Attention text link in the Warning field to open the
warning message.
5. Verify that the text in the Source field is "The projected inventory
600 is higher than the Overflow Level 500 on 02/17/11".

NOTE: The Overflow Level is, in this case, the Maximum Inventory value of
500 because the Reordering Policy for item 1160 is set to Maximum Qty.
Therefore, Microsoft Dynamics NAV 2009 SP1 recommends reducing the
purchase order from 490 to 390 to avoid surplus inventory because of the change
in the sales order.

6. Close the Untracked Planning Elements page.

Challenge Yourself: Update the Purchase Order

Update the purchase order accordingly from the Planning Worksheet, and
verify that the purchase order quantity is updated.

Need a Little Help?

1. Select the Accept Action Message check box before clicking Carry
Out Action Message to update the purchase order.
2. Verify the purchase order quantity by using the Item Card.

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Step by Step: Update the Purchase Order

1. Select the Accept Action Message check box in the Planning

Worksheet.
2. Click Carry Out Action Message.
3. Verify that Make Purch. Orders is selected in the Purchase Order
field.
4. Click OK to update the purchase order.
5. Verify that the Planning Worksheet page is now clear of action
messages.
6. Close the Planning Worksheet page.
7. Open Home and then Items and then double-click item 1160 to open
the Item Card.
8. Verify that the Qty. on Purch.Order field equals 390.

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Summary
Microsoft Dynamics NAV 2009 SP1 contains enhancements that improve the
limitation of superfluous supply when changes in demand and supply occur
outside the given time bucket by using the Overflow Level warning during the
planning stage.

Supply Planning described how the Overflow Level is calculated, and how to use
the Overflow Level feature to help keep your inventory costs down to a
minimum.

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Test Your Knowledge

1. If a sales order is reduced after a purchase order is generated, what type of
action message can you expect will be displayed when you perform supply
planning?
( ) Cancel
( ) Change Qty.
( ) Delete
( ) Change Delivery Date

2. How is the Overflow Level calculated when the reordering policy is

Maximum Qty.?
( ) = Maximum inventory
( ) = Maximum inventory + Minimum order quantity
( ) = Reorder quantity + Reorder point
( ) = Maximum inventory + Reorder point

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Quick Interaction: Lessons Learned

Take a moment and write down three key points you have learned from this
chapter

1.

2.

3.

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Solutions
Test Your Knowledge
1. If a sales order is reduced after a purchase order is generated, what type of
action message can you expect will be displayed when you perform supply
planning?
( ) Cancel
(•) Change Qty.
( ) Delete
( ) Change Delivery Date

2. How is the Overflow Level calculated when the reordering policy is

Maximum Qty.?
(•) = Maximum inventory
( ) = Maximum inventory + Minimum order quantity
( ) = Reorder quantity + Reorder point
( ) = Maximum inventory + Reorder point

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