Order Policy Analysis

Managing Costs, Profits, and Order Quantity Decisions are Connected

For many wholesale and retail businesses, planners base their order replenishment quantities on industry rules, category codes, or ABC analysis. Often, the regular replenishment order cycles are based on traditions, norms, or general internal rules.

However, the goal should be to buy in quantities that maximize profitability. Buyers should be taking a more sophisticated approach by looking at the economics involved by:

Weighing the cost structure in their business
Analyzing the vendor product costs and price bracket information

HIMPACT’s Order Policy Analysis Treats Inventory as an Investment and an Expense

HIMPACT’s Order Policy Analysis provides you with the tools you need to make better buying decisions. The system helps by balancing handling and carrying costs while considering economies of scale.

HIMPACT’s order policy management solution helps you maintain your service goals by providing the highest possible profits on an item-by-item basis. This ultimately helps satisfy your customers while maximizing bottom-line results.

How Order Policy Analysis works in HIMPACT®

Order Policy Analysis increases your profits by calculating the most economical way for you to buy, improving the flow of inventory into your DC and stores, minimizing costs, and identifying the most profitable order quantities.

Much more than Classic EOQ calculations, HIMPACT’s order policy analysis takes into account your overhead and cost of money along with balancing:

PO Header and Line Costs
Carrying Costs of Item and Vendor Brackets
Carrying Cost of Safety Stock associated with Brackets
Seasonality of Product Forecasts

HIMPACT® generates helpful costs and profit graphs, which help you easily identify what order cycle makes the most sense for your specific business needs. Order Policy Analysis also simulates the costs of handling vs carrying for each vendor, based on order sizes varying from 1 to 365 days of demand.