How Narada works out what to order

Every buying decision is really two decisions: when to order, and how much. Narada works out both for every part at every branch, every night. This page explains how, without formulas. Each line on What to Order shows its own working, step by step, when you press Show.

Two numbers, like min and max

Your ERP probably calls them min and max. Narada works out the same two things.

Your ERP	Narada	What it means
Min	Reorder point	When stock falls to here, it is time to order
Max	Order-up-to level	Order enough to get back up to here

Stock falls. It reaches the reorder point. You order enough to get back to the order-up-to level. Stock falls again. That is the whole cycle.

When to order: the reorder point

After you order, you wait for the delivery. Until it arrives, you only have what is on the shelf. So the reorder point is enough stock to cover sales during that wait, plus some spare for a bad week.

If you look at the buy list once a week, which is what Narada assumes, the line sits a little higher. A part just above it will not be seen again until your next look, so the line also covers those days. With Continuous it covers the delivery wait alone.

The wait Narada uses is how long the supplier really takes, measured from your past deliveries, once there are enough to measure. Until then, it uses the lead time in your files. With none on file, it assumes two weeks and says so on the line.

The spare stock is called safety stock. It covers weeks when more sells than usual, or the delivery comes late. Narada sizes it for each part every night, from that part’s own sales and that supplier’s own deliveries. See What sets your safety stock.

How much to order: the order-up-to level

Most buyers don’t order every day. They look at the buy list once a week. So the stock you buy today has to last until the delivery arrives, and then until the next time you look.

That is why the order-up-to level covers the delivery wait plus the days until your next check. If you check every day and order the moment a part drops, set How Narada times your orders on Your Numbers to Whenever a part needs it. Narada then sizes orders smaller. See How often should orders be sized for?.

How sure do you want to be?

No forecast is perfect. More spare stock means fewer empty shelves, but more cash tied up. The last few percent of certainty cost the most, because you are buying cover for weeks that rarely happen.

Every part has a target for how sure to be. By default, it is the higher of two things: the floor for the part’s class (A, B or C), and the part’s own money answer. The money answer weighs the margin you would lose by running out against the cost of holding one more. A part with no price or cost on file uses its class floor. You can see and change these targets in Your Numbers. The details are in How sure Narada aims to be.

It counts what is already on its way

Narada doesn’t compare the reorder point with the shelf. It compares it with your position:

what you have on hand, plus what is already on order, minus customer promises that the forecast does not already cover

A promise to a customer is usually part of the sales the forecast already expects. Narada only takes off the part that goes beyond them, so the same sale is not counted twice.

So a part with an order already on its way isn’t ordered again. A few more rules keep this honest:

An order due after the wait it has to cover doesn’t count yet.
An order with no delivery date doesn’t count.
An order past its promised date still counts while it is within the time this supplier usually takes, measured from its past deliveries. After that it is listed under Late orders on the Orders page. Tell Narada whether it is still coming, so it knows whether to count it.
An order line with no branch counts at no branch when you have more than one. Add the branch in your ERP.
If an order arrived in part, only the rest counts as still on its way.

Then the supplier’s rules

The quantity is rounded up to the supplier’s order multiple (the batch size they sell in) and their minimum order.

If a supplier’s minimum would leave you with far too much stock, Narada doesn’t quietly buy it. It holds the line under Hold — overstock and shows what buying it anyway would cost. You decide. Press Show on the line: the “Minimum vs lost sales” step says how many a day the part must sell for the minimum to pay, next to the pace Narada plans on. If you know it sells slower than that, the minimum does not pay.

Moving stock first

Before suggesting a buy for one branch, Narada checks whether another branch has more than it needs. If so, it suggests moving that stock first, under Transfer before you buy.

This matters most when a supplier’s minimum is far bigger than what one branch needs. Say West needs 49 boxes, the supplier sells only in 500s, and Central has 88 spare. Narada does not tell you to buy 500. The line reads Move 49 from CEN and stays on your To order list until it is done. It only does this when moving the stock makes your order to that supplier smaller.

Narada does not move the stock. You do that in your ERP, then press Moved it so Narada stops suggesting it. If the move can’t happen, press Can’t move and Narada tries another branch, or tick the line to buy the minimum.

Putting Narada’s numbers into your ERP

Press Reorder points on What to Order to download every part’s reorder point and safety stock as a spreadsheet. The reorder point is the number that matches your ERP’s min.