One question that people ask me regularly is: how do we access a simple reorder point calculator for the ROP for spare parts when our data is inadequate or unreliable?
Well, now we have a way to do just that!
At SparePartsKnowHow.com we have created a reorder point online calculator that approximates the statistics required for the ROP calculation, based on some easy-to-identify indicators.
For the user this means that you just need some basic information to guide your decision making – and no statistical know-how!
The reorder point calculator is based on the standard formula for calculating the ROP for items that move in varying quantities (that is, the demand on each occasion may be different). This is (Average usage X Lead Time) + Safety.
The problem to solve is calculating the safety stock.
We achieve this by using a Mean Average Deviation (rather than standard deviation) and standard tables for customer service (as an indicator of criticality) to identify values for specific Criticality Factors. Similarly we used a weighted average approach to calculate values for the MAD based on scenarios of low, medium, and high volatility. These translate into the Volatility Factor.
While that all sounds very complicated, the model simplifies this so that you can estimate a reasonable ROP using easy to find data (such as average usage and lead time) and without having to do any of the statistical analysis.
Importantly, we also take into account the ‘one off’ requirements that might arise from normal maintenance activity – such as needing to replace 14 filters at once when you usually only replace (say) 7. This ensures that the ‘trap of averages’ doesn’t catch you out.
This reorder point calculator also enables you to easily and quickly apply a ‘what-if’ analysis to determine holding requirements under different scenarios. For example, what-if the lead time is longer, what-if you decide that the part is more critical, what-if usage is more volatile than you think. Just plug in the values and compare results! Simple and easy.
This is common-sense decision making integrated into an analytical decision model. Think of this as providing the guidance required to eliminate guesswork.
Pro Members at SparePartsKnowHow.com can access the calculator as part of their daily decision making via the Pro Level Home Page.
This simple and practical ROP calculator could save you tens of thousands of dollars!