TRAX MANUALS > Inventory > Inventory Module > Inventory, Update Menu > Inventory Optimization (Expendable) > Optimization Area, via Inventory Optimization (Expendable) > Inventory Optimization (Expendable), Optimization Tab

TRAX displays the Inventory Optimization (Expendable) window.

Query:

The following information/options are available in this window:
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P/N

The Part Number reference for the aircraft part.

Note: Only main part numbers can be selected for the optimization.

P/N Effectivity drop down

From the drop down menu, select the A/C - Tail effective to the P/N the optimization is being simulated for.

Reference Cost

The part’s reference cost is used by the reorder formula to determine the EOQ value in the P/N Inventory Levels window. If left blank, the EOQ field that is updated when the P/N Reorder Level is generated will remain "0.00."

Note: This field functions in accordance with the Switch PNREFCST. If set to Yes, the system will compare the Part Number Reference Cost to the PO unit cost. If there is a difference the user will receive a prompt asking if they would like to update the Part Number Reference Cost (P/N Master, Cost Tab) with the PO Unit Cost.

Note: This information is pulled from the P/N Master, Costing Tab, via the P/N Master of the Settings Training Manual.

Average Cost

The Average Cost of the Part in local currency, which is re-calculated upon receipt of inventory from Purchases, Invoice Adjustments (if there is a difference between PO Price and INV Price), and Return to Stock (which is unknown inventory returned at average cost or credited to the Work Order, differing the P/N Cost from the Average Cost).
The explanation for the formula is as follows:
(The total number of Unit Costs currently in Inventory) / (The total of all quantities currently in inventory). For example, if you have three parts in inventory for a certain P/N (three parts including all possible instances of the part [available in inventory, available for repair etc.]). And the unit costs on each part are $10, $15, and $20 each. If all information has been entered properly, the current Average cost would be calculated as (10 + 15 + $20) / 3) = $15. Expanding on the example, if you receive a new same part at $18, the current Average cost would re-compute as follows: ($10 + $15 + $20 + $18) / (3 + 1) = 15.75.

Note: This information is pulled from the P/N Master, Costing Tab, via the P/N Master of the Settings Training Manual.

Replenishment Cost Factor

The cost of replenishing inventory. The formula for replenishing stock compares forecast stock usage against available stock throughout the coming year. Existing replenishment orders are also considered since these affect future requirement needs.

Note: This information is pulled from the P/N Master, Costing Tab, via the P/N Master of the Settings Training Manual.

Carrying Cost Factor

The Carrying Cost Factor is a percentage that represents the total cost of holding inventory over a period of time (storing, stocking, handling, taxes, insurance, depreciation, etc.) divided by the total value of the inventory. For example, if there is an inventory value of $10,000 and a carrying cost of 20%, then the carrying cost is $2,000. Knowing this percentage can help determine if inventory carrying costs are optimal or if they can be reduced. This field is represented as a percentage, therefore a value of "0.30" would indicate 30%.

Note: This information is pulled from the P/N Master, Costing Tab, via the P/N Master of the Settings Training Manual.

Forecast 12 Months

This value is pulled from the Inventory Optimization (Expendable), Forecast Usage Tab. For additional information, refer to the Inventory Optimization (Expendable), Forecast Usage Tab via Inventory Optimization (Expendable) of the Inventory Training Manual.

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Reorder Level/EOQ Scenarios:

The following information/options are available in this window:
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Apply SL Factor checkbox

Select the Apply Service Level checkbox to apply the Service Level value to the simulation.

Cost Method drop down

Select from one of the following Cost Methods:

• Reference Cost
• Average Cost

Usage Method drop down

Select from one of the following Usage Methods:

• 12 Month Usage
• 12 Month Forecast

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Scenarios:

The following information/options are available in this window:
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Location Filter button

Select this button to access the Location drop down. Select one or multiple locations to run the simulation for.

Alpha Factor

This number represents the multiple of the initial population size. The larger the population being used, the better the results. However, the larger the population, the longer the algorithm needs to run. Hence, the alpha factor plays an essential role, since a large Alpha Factor = a large population. This defaults to three.

Run Optimization Algorithm button

Select this button to run the simulation once all criteria has been selected. The simulation can be done multiple times for optimal results. Once the Optimization is complete, the following information box will appear:

View Recommendations button

Select this button to view all recommended transfer order(s) of parts. If there are too many parts in one location, the system will recommend that the user transfer these parts to other locations. Once a location requires more stock, the user may create a requisition for the part.

Create Requisitions button

Select this button to create a requisition for a part based on the recommendation of the Inventory Optimization.

Create Transfer Orders button

Select this button to create a transfer order based on the recommendation of the Inventory Optimization.

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Once a P/N is selected, the results for the simulation are shown below:

Results:

The following information/options are available in this window:
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Location

The Location for maintenance events, inventory stores, orders, transactions, or training events.

Accept checkbox

Select the Accept checkbox to accept the recommended calculations. Select the Save button to save these values to the Inventory Optimization (Expendable), Optimization tab.

Lead Time

The number of days needed for the delivery of the P/N.

Usage (12 Months)

The number of times the P/N has been used in a 12 month period.

Expendables = Issued P/Ns - Returned P/Ns

Rotables = Issued P/Ns

Service Level

This is the percentage of service the user wants for every request of a P/N.

(i.e. For one particular company, it may be acceptable for a P/N to be available for only 50% of the time, based on their need for that part.)

This value is derived from the following formula:

Service Level = the inverse of the standard normal cumulative distribution. The distribution has a mean of zero and a standard deviation of one.

Maximum Stock

The maximum in stock quantity allowed. This value is derived from the following formula:

Maximum Stock = Reorder Level + Minimum Stock

Minimum Stock

The minimum in stock quantity required (Safety Stock). The minimum stock level can be used to report on items that require urgent action.

Minimum Stock = Reorder Level

Reorder Level

The Re-Order point for the Part. This value is derived from the following formula:

Reorder Level = [ ROUND (Usage / 365) * Lead Time) + if the 'Apply Service Level Factor checkbox' is selected, then the Service Level Factor,0) ,0 ]

Maximum Order

The Maximum Order is the result of the EOQ.

Minimum Order

The Minimum Order is the result of the EOQ.

EOQ

The Economic Order Quantity. This value is derived from the following formula:

EOQ = ROUND [ SQRT 2 * (Cost Method * Usage) * Replenishment Cost Factor) / (Cost Method^2 * Carrying Cost Factor),0 ]

Optimization Algorithm Results Assets

The number of parts required to achieve the Service Level %.

Optimization Algorithm Results Recommended

The number of parts recommended for each location.

Optimization Algorithm Results Adjustments

The number of parts needed to be added or removed to arrive at the Assets Required value.

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