Reorder level is the level on reaching which an order has to be placed for a stock item. The impor- tance of a reorder level arises from the desire to have sufficient stocks to service customer orders and at the same time not to have unnecessarily high stocks. Therefore, the points to be consid- ered in deciding reorder levels are:
Lead time for suppliers to deliver stock
Delivery time specified by the customer
The stock in hand to satisfy orders in the meantime
1. Defining Re-Order Level
Reorder Levels can be defined in either Simple Mode or Advanced Mode.
Go to .. Gateway of Tally > Inventory Info. > Reorder Levels
Select Building Materials and press Enter
The Specify Reorder Levels screen appears where all the Stock Items (Bricks, Cement and Steel) under the Stock Group (Building Materials) are displayed.
The Simple Reorder Level appears as shown:
The Reorder Level screen appears based on the books beginning from and the date of last entry
- Click Alt+R : Adv Reorder button
- Click Alt+M : Adv Min Qty button
The following buttons are used in Reordering:
The latter two buttons allow you to define the reorder levels using either simple parameters or advanced parameters
- Ctrl + F4: New Parent (to change the Stock Group).
- Alt + R : Simple Reorder (toggles with Advanced Reorder).
- Alt + M: Simple Minimum Quantity (toggles with Advanced Minimum (Quantity).
The Advanced Reorder Level screen appears as shown below :
- Set the Reorder Level and Minimum Order Quantity for the stock item Bricks using advanced partameters as shown below :
Set the Reorder level at 4,500 pcs (user-defined) or you may also consider the consumption pattern for the last 5 Days and accept the value computed as the Reorder Level.
Press Ctrl+A to accept the screen and return to the Gateway of Tally.
2. Display Re-Order Status
We have so far defined the Reorder Levels. However, since the actual analysis is possible only through the Reorder Status report, let us view the same.
Go to Gateway of Tally > Display > Statements of Inventory > Reorder Status
- Select Building Materials
- Press F2 and change the period from 1-4-2009 to 30-1-2010
- The Inventory Reorder Status screen appears as shown below :
# Click the A : Reorder Only button ( A : Reorder Only button toggles with the A : Show All button )
A report is displayed giving the details of only Bricks, since the report is configured to display only those items which are below the reorder level. To analysis the Inventory Reorder Status Report, place the cursor on any of the details given in the above report and press Enter. You can view the details to verify its correctness.
3. Tips Points - Re-Order Process
i. Name of Item
The list of stock items are displayed which are grouped under the selected stock group. Highlight the required item and press Enter to arrive at the Movement Inward details. This gives us the details of the stock items in terms of the quantity, rate and value. You can drill down to the last level of voucher details.
ii. Closing Stock
Remember, in the section on Order Processing we first raised a Purchase Order for 5000 pcs which we then purchased. After that, we raised a Sales Order for 4000 pcs which we subsequently sold - this resulted in a closing quantity of 1000 pcs. The column next to the name of the item displays the closing quantity as per the date specified in the report.
Press Enter on the value shown under closing stock and you will get a monthly inward-outward-closing balance report of the selected stock item.
iii. Purchase Orders Pending
This quantity is arrived at on the basis of the total purchase orders pending. Remember we raised 2 Purchase Orders for 4500 pcs and 5500 pcs. The total of 10000 pcs appears in the Purchase Orders Pending column.
Press Enter on the value shown under Purchase Orders Pending and you will get a report displaying outstanding purchase orders.
iv. Sales Orders Due
This quantity is arrived at on the basis of the total sales orders due. Remember, we raised 2 Sales Orders for 3000 pcs and 4250 pcs. The total of 7250 pcs appears in the Sales Orders Due column.
Press Enter on the value shown under Sales Orders Due and you will get a report of the outstanding sales orders.
v. Nett Available
The quantity given here is arrived at based on the formula: Closing Quan- tity + Purchase Orders Pending - Sales Orders Due i.e., 1000 + 10000 - 7250 = 3750 pcs.
vi. Reorder Level
As per our definition, if we select the greater of 4500 pcs or the level of Con- sumption over the last 5 days then the reorder level will be
displayed as 4500.
To define consumption pattern as lower, highlight the Reorder Level column and press Enter to view the Specify Reorder Level screen.
Shortfall is displayed as on 31-1-2010 with the specifications:
The quantity is arrived at based on 4500 (reorder level) - 3750 (nett available) = 750 pcs shortfall. The reorder level if more than the nett available, the difference will be shown as Shortfall.
- ‡ Reorder level being 4500 pcs or consumption of last 5 days whichever is higher.
- ‡ Minimum order quantity of 1500 pcs or consumption of last 5 days whichever is higher.