Setting the Backorder Tolerance Quantity

Use the backorder tolerance quantity (BTQ) to exclude orders with unusually large quantities of the product -- even larger than exceptional sales -- from the demand calculation. This value is the maximum order quantity for the product on one order. Any order with a quantity greater than this amount is excluded from the demand calculation.

When filtering orders for the demand calculation, the system first eliminates from the demand calculation those orders with products above the BTQ, before determining whether an order qualifies as an exceptional sale. Unlike the exceptional sales inventory parameter, which changes depending on the second largest sale made in the forecast period, the BTQ is a fixed amount.

For example, Product A normally sells one or two each per month. The system sets the exceptional sales inventory parameter to 200% and the backorder tolerance quantity is set to six. A contractor orders a quantity of 24 of Product A for a large job, and schedules shipments in groups of eight every month for the next three months. Whether you define hits by the order (one order of 24) or the generation (three generations of eight), the system does not consider this order when calculating demand. Furthermore, consider that to be an exceptional sale, the highest order quantity must be 200% of the second highest order quantity, AFTER eliminating orders greater than the BTQ. Therefore, any sale of Product A in a quantity over (6 / 200% = 3) three is considered exceptional.

Note: The following procedure is a manual process for a single product. Use the Mass Load program to enter inventory parameters to groups of products.

To set the backorder tolerance quantity for identifying exceptional quantities:

From the Files menu, select Product Maintenance to display the Product Maintenance screen.
Display a product record.
Use the Inven hot key to display the Primary Inventory Maintenance screen.
Use the Forecast Parameters hot key to display the Forecast Parameters Maintenance screen.
Use the Hierarchy hot key to select a branch.

Note: Use the Find hot key as necessary to locate a branch that is in the list, but not in the viewable area. Use Alt-Insert to add a branch or territory to the list. The new branch or territory inherits the settings of the previous entry. Use Alt-Delete to remove a branch or territory from the list.

In the BTQ column for each branch, enter the maximum order quantity considered normal for this product.
Enter other forecast parameters, if needed.