MARKET RATE OF DEMAND - Sikich · Sikich, LLP Market Rate of Demand Dynamics NAV 2015 3 INTRODUCTION The Market Rate of Demand (MRD) is a worksheet tool designed to help manage Inventory

Sikich, LLP Market Rate of Demand

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SIKICH, LLP

MARKET RATE OF DEMAND MICROSOFT DYNAMICS NAV 2015

Setup and Processing Guide

Note: This Add-on is available in English (United States) only. Please contact Sikich if you are interested in

localizing the solution to your region.


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Table of Contents

INTRODUCTION ............................................................................................................................................. 3

MRD WORKSHEET AND PROCESS ............................................................................................................. 4

MRD RIBBON .............................................................................................................................................. 11

MRD SPECIAL REPORTS ............................................................................................................................ 12


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INTRODUCTION

The Market Rate of Demand (MRD) is a worksheet tool designed to help manage Inventory at lowest and most

cost effective level based on Sales History. MRD calculates Target Quantity (Maximum Inventory) for an

Item/Stock Keeping Unit based on Sales History. The Target Quantity is calculated based on Average Weekly

Sales and the No. of weeks of On-Hand Quantity we want to carry for the item.

MRD calculates Average usage using any of the four following methods:

4-week average (4 Wk. Ave.)

10-week average (10 Wk. Ave.)

Previous quarter this year (Prev. Qtr.)

Same quarter last year (Same Qtr. Prev. Yr.)

The calculated Averages are displayed under their respective Columns on the MRD Worksheet. MRD

Worksheet can be filtered by any of the fields on the screen including Vendor, Item Category Code, Product

Type Code and Purchasing Agent.

Note:

Time periods for the quarter are fixed, and not rolling (i.e. 3rd quarter is always 7/1 – 9/30)

Using Stock keeping Units for inventory is highly recommended for utilizing Market Rate of

Demand


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MRD WORKSHEET AND PROCESS

The MRD functionality can be accessed from the Dynamics NAV Manufacturing and Purchasing Menus.

Departments >> Manufacturing >> Planning >> Tasks

Departments >> Purchase >> Planning >> Tasks

OR

Type and search through NAV Search Box.


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The Market Rate of Demand Worksheet is the primary interface to Calculate, Evaluate and Manage Inventory

levels.

The MRD process starts by running the ‘Load MRD’ function located on the Ribbon of the MRD Worksheet

Page which is located under the ‘HOME’ and the ‘ACTIONS’ tabs.


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The ‘Load MRD’ process calculates and populates the lines in the MRD Worksheet based on criteria and filters

set on the Request Page.

1. As Of Date: Specify the Date as of which the Market Rate of Demand needs to be calculated.

2. Batch Name: Specify a Batch name. This is not a mandatory field. It needs to be specified only if the

MRD calculations are done in multiple batches based on type of Items or Purchasers.

The process can be filtered by one or more fields on the Item Table.

Click ‘Yes’ on the confirmation message.


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The system displays the number of records generated as part of the calculation. The MRD Engine takes into

account the Production BOM components for the main Sales Item. In this example, item ES210L-25316C is

the main Sale Item with a Production BOM consisting of 3 component Items. All items are stored in the same

location, so 4 MRD records are generated – one line for each item.

The MRD calculations are driven by the ‘As of Date’. There are many comparative Quantity fields on the MRD

Worksheet. The Fields on the MRD Worksheet are calculated as follows:

Location Code: Lines are calculated per Item/SKU per Location Code

Target Weeks on Hand: This is a manual input field to specify the No. of Weeks of Inventory to keep on

Hand. This is used in the calculation of ‘Suggested Target Quantity’ when the ‘Promote change’

function is clicked on the MRD Worksheet Page Ribbon.

Note: When determining the target weeks of On-Hand Inventory, Vendor Lead time for Supply should

be taken into account.

Average to Use: This field is used in the calculation of ‘Suggested Target Quantity’. Available options

are: 4 Wk. Ave., 10 Wk. Ave., Prev. Qtr., Same Qtr. Prev. Yr. Default value is set to ‘4 Wk. Ave.’ during

the ‘Load MRD’ calculation but can be changed to any of the other options and recalculated by

clicking ‘Promote Change’.

Suggested Target Quantity: Calculated by the MRD engine when the ‘Promote Change’ function is

clicked on the Ribbon.

This field is calculated based on the values in the following fields:

o Target Weeks on Hand

o Average to Use

o 4 Week Average/10 Week Average/Prev. Qtr. This Year/Same Qtr. Last Year – as

applicable based on the selection in the ‘Average to Use’ field.

Suggested Target Quantity = Average Weekly Sales X ‘Target Weeks On Hand’.

For example: If the ‘Average to Use’ = ‘4 Wk. Ave’, Average Sales for the last 4 weeks is

10 units and we want to maintain 6 weeks of On-Hand inventory, the ‘Suggested Target

Quantity’ is calculated as 10*6 = 60

Target Quantity: Maximum Quantity of the Item set on the Item/SKU Card. If not currently set then the

starting value is set as zero. Clicking the “Promote Change” action will copy the “Suggested Target


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Quantity” to the “Target Quantity” field on the MRD worksheet as well as update the value on the

Maximum Quantity field on the Item/SKU card.

Quantity on Hand: Quantity on Hand per the Item card

Qty. on Sales Order: Quantity on Open Sales Orders

Qty. on Purchase Order: Quantity on Open Purchase Orders


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Quantity Available: Quantity on Hand - Qty. on Sales Order + Qty. on Purch. Order + Qty. in Transit

Qty. in Transit: Quantity on Hand in Item Locations marked as “Use as In-Transit”. So, this essentially

represents quantity that has been Transfer Order Shipped but not yet received.

Forecast Quantity: Calculated based on manually entered MRD Forecast Entries

Note: MRD Forecast entries are not linked to standard NAV Production Forecast Entries. The MRD

Forecast entries are used to make manual updates/tweaks to the MRD calculations that are not

entered into standard NAV Production forecast – mainly to account for seasonality and other changes

and review the quantities based on these. MRD’s only connection to MRP is the setting of Maximum

inventory.

Target %: This field is used to show how close ‘Quantity Available’ (Quantity On Hand minus Qty. on

Sales Order) is to the ‘Target Inventory’. This calculation also sets the Exception flags on the line

(Exception and Exception % fields) if the Target% < 35% of Target or if Target% > 85% of Target.

Standard Cost: Standard Cost of the Item/SKU from the Item/SKU card

Bill of Materials: Indicates the Bill of Material for the Item assigned on the ‘Production BOM No.’ field

of the Item card

Item Category Code: Shows the Item Category Code assigned to the item

Product Group Code: Shows the Product Group Code assigned to the Item

Product Class: Manual input field for entering additional Product Class detail if applicable

4 Week Average: 4 Week Average Sales of the Item/SKU

10 Week Average: 10 Week Average Sales of the Item/SKU

Prev. Qtr. This Year: Usage of Item/SKU in the previous Quarter of the current year

Same Qtr. Last Year: Usage of the Item/SKU in the same Quarter of previous year

Last Week Sale, Week-2, Week-3, Week-4: Weekly Sales of the Item/SKU for each of the previous 4

weeks

Direct Usage Month 1 - 12: Direct Item usage per month for each of the 12 months

Component Usage Month 1 -12: Component usage per month for each of the 12 months

Total Usage Month 1-12: Total usage per month for each of the 12 months (Direct Usage +

Component Usage)

Direct Usage: 1-6 months: Total usage of Direct Item for months 1-6

Component usage: 1-6 months: Total usage of Components for months 1-6

Total Usage: 1-6 months: Total usage for months 1-6

Direct Usage 7-12 Months: Total usage of Direct item for months 7-12


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Components Usage 7-12 Months: Total usage of Components for months 7-12

Total Usage 7-12 Months: Total usage for months 7-12

Direct Usage: 12 Month Total: 12 Month Total Usage of Direct Item

Component Usage: 12 Month Total: 12 Month Total Usage of Component Item

Total Usage: 12 Month Total: 12 Month Total Usage of Component Item

MRD Summary Factbox

The MRD Summary Factbox shows a summary of the calculations on the Worksheet.


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MRD RIBBON

In addition to MRD specific functions and reports, the HOME, ACTIONS, NAVIGATE and REPORT tabs of the

MRD Worksheet Ribbon contain links to most of the Inventory and Supply Chain functions in NAV.

HOME Tab

ACTIONS Tab

NAVIGATE Tab

REPORTS Tab


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MRD SPECIAL REPORTS

The Inventory Usage Monthly and Six Twelve Month Report are two special reports that come with MRD

Inventory Usage Report

This report provides Usage analysis in both Column and Row formats. The top section shows the Direct (D),

Component (C) and Total (T) Usage in Detail for:

Each month for months 1-6

The Sum total of Usage for months 7-12

The Sum total of Usage for months 1-12 in their respective columns.

The second section shows the Summary Usage Analysis for each month in Row format. The calculations and

aging is based on the ‘As Of Date’ used in MRD Worksheet calculation


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Six/Twelve Month Report

This report shows the Quantity on Hand and the 6 month and 12 month usage of the items. The report can be

filtered by one or more fields on the MRD Worksheet/table.

Six/Twelve Month report Request Page

Six/Twelve Month Report Print Preview

Conclusion

The objective of MRD is to optimize an organization’s Inventory by only replacing what is sold and/or consumed

based on Sales History while at the same time providing the flexibility to manually account for exceptions such

as seasonality and short term changes that may require additional inventory to be ordered and carried in stock.

Setting the appropriate Target level is key point in MRD process. Ideally the Target would be set at a level that

is most cost effective for the organization and still allows for high level of customer satisfaction from

availability perspective.

Documents

MARKET RATE OF DEMAND - Sikich · Sikich, LLP Market Rate of Demand Dynamics NAV 2015 3 INTRODUCTION The Market Rate of Demand (MRD) is a worksheet tool designed to help manage Inventory