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--- reports:purchasing [2024/07/26 03:29] – [mSupply's better algorithm] Louisa Wong
+++ reports:purchasing [2024/08/12 01:41] (current) – [Report output] Louisa Wong
@@ Line 124: / Line 124: @@
 Step 1:
 First we are adjusting by % days in stock to be considered fully stocked. This calculation will be used in Step 2 to calculate the typical AMC.
-So if this is set as 90%, only months with >90% stock will be considered.
+So if this is set as 90%, only months with ≥90% stock will be considered.
-In this case, Nov 2023 (202311) and Oct 2023 (202310) are excluded.
+In this case, Nov 2023 (202311) and Oct 2023 (202310) are excluded as it is less than 90%.
 {{:reports:pasted:20240726-025947.png}}
 Step 2:
-To calculate the typical AMC after the first exclusion criteria, we are using:
+We then calculate the typical AMC which excludes the months Nov 2023 (202311) and Oct 2023 (202310) from step 1. To do this, we use:
-(Total consumption of only months included in Step 2)/(Number months usage basis)
+(Total consumption of only months included in Step 1)/(Number months usage basis)
 = 100 / 7.8 = 12.82. Red coloured boxes indicate exclusion.
+(Note: We have 7 full months, and 0.8 of a month due to July 2024 (202407) as 26 days is 0.8.
 {{:reports:pasted:20240726-030102.png}}
 Step 3:
-Next we are excluding months that have 33% days of low stock - this is done automatically and is not set by the user. In the example, this is Nov 2023 (202311) as it is the only month with less than 33% days in stock for the month.
+Next there is an automatic exclusion for days of low stock ≥33% in the month. Note: This is automatic and is not set by the user. In the example, this is Nov 2023 (202311) as it is the only month with less than 33% days in stock in the month.
 Step 4:
-Since we have entered "100% of typical AMC that stock level is considered compromised", we now take the typical AMC (12.82) and check the Mean SOH of each month to make sure that this is equal or higher than 12.82. If this is not higher than 12.82, that month will be excluded from the Adjusted AMC calculation (Step 5). Note: If we had selected 90% of typical AMC to be considered compromised, this means we will be looking at 90% stock or more of the typical AMC (12.82) and anything less than this will be excluded.
+Now we consider the criteria of "100% of typical AMC that stock level is considered compromised" which we entered in the Report options.
+Since this is set as 100% by us, we now take the typical AMC (12.82) and check the Mean SOH of each month to make sure that this is equal or higher than 12.82. If stock level is not higher than 12.82, that month will be excluded from the Adjusted AMC calculation (Step 5). Note: If we had selected 90% of typical AMC to be considered compromised, this means we will be looking at 90% stock or more of the typical AMC (12.82) and anything less than this will be excluded.
 To now obtain the number of months to be considered for the adjusted AMC:
-We will exclude the 33% low stock from Step 3.
+We will exclude the 33% low stock month from Step 3.
-We will exclude any months with (x)% typical AMC stock level that is considered compromised.
+We will exclude any months with (x)% typical AMC stock level that is considered compromised (which in this case, there is none).
+We will be including the month with 11 days in stock however, as it is more than the 33% exclusion step and the first step where it was excluded was just for calculating what months to use for typical AMC.
-From the example, we will now have 8.8 months that we will be considering for the Adjusted AMC. (Note: 0.8 of the months comes from July 2024 (202407) as 26 days is 0.8 of a month.
+From the example, we will now have 8.8 months that we will be considering for the Adjusted AMC.
 {{:reports:pasted:20240726-030224.png}}
@@ Line 152: / Line 155: @@
 Step 5:
 We can now calculate the Adjusted AMC with the formula:
-Square root[(Days in stock)/(Days in the month)] * Consumption
+Square root[(Days in month)/(Days in the stock)] * Consumption
 We check this individually for each month that has not been excluded.
-So, if the Days in month = Days in Stock, the square root of this = 1.
+So, if the "Days in month" = "Days in Stock", the square root of this = 1.
-In Dec 2023 (202312) = 1 x 100 = 100.
+In Dec 2023 (202312) = 1 x 100 (consumption) = 100.
-In Oct 2023 (202310) = Squareroot(31/11) = 1.6787. Then 1.6787 x 100 = 167.87.
+In Oct 2023 (202310) = Squareroot(31/11) = 1.6787. Then 1.6787 x 100 (consumption) = 167.87.
-Add these together = 267.87 total units for all included months (8.8 months).
+Add these together:
++ 167.87 = 267.87 total for all included months that we will use to calculate adjusted AMC.
 Step 6:
-For the Adjusted AMC = 267.87/8.8 months = 30.34
+For the Adjusted AMC = 267.87/8.8 months = 30.34 units per month.
+**Steps Summarised:**
+Step 1: Adjusting by % Days in Stock
+  * Set threshold for fully stocked (e.g., 90%)
+  * Exclude months with < 90% stock
+Step 2: Calculate Typical AMC
+  * Use months not excluded in Step 1
+  * Calculate Typical AMC = (Total consumption of only months included in Step 1)/(Number months usage basis)
+Step 3: Automatic Exclusion for Low Stock
+  * Exclude months with < 33% days in stock
+Step 4: Compromised Stock Level Check
+  * Set threshold (e.g., 100% of typical AMC)
+  * Exclude months below threshold
+Step 5: Calculate Adjusted AMC
+  * Apply formula to each included month = Square root[(Days in month)/(Days in stock)] * Consumption
+  * Sum the results
+Step 6: Final Adjusted AMC Calculation
+  * Divide total consumption by number of months
+  * Calculate Adjusted AMC
+Note: If all months have been excluded due to the first or second exclusion criteria, then the typical AMC calculation will automatically be used instead.
 ==== Report options ====
@@ Line 240: / Line 270: @@
   * Number of months in stock : Calculated by ('Effective SOH') / ('Adjusted AMC'). This gives the number of months the current stock will last based on adjusted consumption rates.
-  * Ordered Quantity used : Calculated by ('Stock on order') - ('Back order'). This is the quantity of stock that will be received after accounting for all back orders.
+  * Ordered Quantity used : This is how much of the stock you have ordered that you will actually need to use, based on how much you use each day and how much stock you already have (Note: forecast calculation will affect this). This is determined by:
+         * Calculate the "usage per day of stock" = AMC / 30.4375
+         * Multiply "usage per day of stock" with the "total number of days in your months stock required" to get "Total usage required" = Usage per day of stock x Total number of days in your months stock required
+         * Calculate your "Future stock on hand" = Stock on order + Effective SOH - Backorder
+         * Subtract "Total usage required" from "Future stock on hand" to get the "Net stock difference to be used" = Total usage required - Future stock on hand.
+         * This value ("Net stock difference to be used") now determines the "Ordered Quantity used".
+                 * If the value is a negative value and there is "Stock on order", add the "Net stock difference to be used" with "Stock on order" = "Net stock difference to be used" + "Stock on order"
+                 * If the value is a positive value and there is "Stock on order", if "Net stock difference to be used" is greater than "Stock on order", the "Ordered Quantity used" will be the same value as the "Stock on order" as all the stock on order will be used up.
+  * Suggested Order calculated by:
+     * If expected delivery date has not been adjusted: ('Months stock required' x 'Adjusted AMC') - ('Effective SOH' - 'Stock on order') + 'Backorder'.
+     * If expected delivery date has been adjusted, this will be accounted for as it will only look at the stock required from date of expected delivery to the end of months stock required:
+         * Usage per day = Adjusted AMC/30.4375 (which is from 365.25/12 which is days in the full year)
+         * Suggested order quantity = Usage per day x Days needed (which is 'Expected delivery date' - End date of the 'Months stock required', or days needed in total - days of lead time) - ('Effective SOH' - 'Stock on order') + 'Backorder'
-  * Suggested Order : Calculated by ('Months stock required' x 'Adjusted AMC') - ('Effective SOH' - 'Stock on order') + 'Backorder'. This determines the quantity of stock that needs to be ordered to maintain the desired inventory levels after considering current stock, back orders, and stock already on order. Note: if you are using the "Minimum stock" function, the suggested order will also take this into account to ensure that there is enough stock to meet this value. This will be calculated by taking the minimum pack size to cover the minimum stock.
+  * This determines the quantity of stock that needs to be ordered to maintain the desired inventory levels after considering current stock, back orders, and stock already on order. Note: if you are using the "Minimum stock" function, the suggested order will also take this into account to ensure that there is enough stock to meet this value. This will be calculated by taking the minimum pack size to cover the minimum stock.
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