Override Rules
These override rules apply to SKU Constraints and SKU Overrides.
1. Post-Optimization Overrides have higher priorities than Pre-Optimization Overrides
a. Both Pre-Optimization Overrides and Post-Optimization Overrides are applied. The Pre-Optimization Overrides are applied first and then the Post-Optimization Overrides are applied.
2. All of the override types are converted to the effective ROP values that satisfies the overrides.
a. For example, if you have the following:
▪ Maximum Stock Maximum = 10
▪ EOQ = 1
The then the effective Maximum ROP will be 9
3. When multiple overrides exist for a SKU then the maximum of the minimums and the minimum of the maximums are enforced
a. The lowest effective ROP that satisfies all the maximum overrides is obtained
b. The highest effective ROP that satisfies all the minimum overrides is obtained
4. The overridden ROP must satisfy the minimum and the maximum, with the maximum ROP taking priority over the minimum ROP should they conflict
a. For example, with an effective minimum ROP of 10 and an effective maximum ROP of 5, then the effective override will be the ROP of 5
5. If a Fixed EOQ override violates the relationship (Fixed Stock Maximum or Maximum Stock Maximum = (Fixed ROP or Minimum ROP) + EOQ), then the EOQ is set to the Stock Maximum Override - ROP Override
For all of the following examples, all overrides are assumed to be the same pre/post.
Example 1 — Minimum of Maximums and Maximum of Minimums
• If an override has multiple values the maximum of the minimum values will set the minimum
◦ SKU with EOQ = 1
▪ Minimum ROP = 1
▪ Minimum Stock Maximum = 10
(With EOQ of 1 this results in ROP = 9)
▪ Maximum of the Minimums is ROP = 9
• If an override has multiple values for the maximum then the minimum value will be set as the maximum
◦ SKU with EOQ = 1
▪ Maximum ROP = 10
▪ Maximum Stock Maximum = 5
▪ Minimum of Maximums is ROP = 4
• The maximum override has priority over the minimum override
◦ SKU with EOQ = 1
▪ Minimum ROP = 10
▪ Maximum Stock Maximum = 5
▪ Maximum has priority and ROP = 4
Example 2 — Avoid Having a SKU with Multiple Fixed Overrides
For a SKU with 0 forecast and the following overrides:
• Fixed ROP = 60
• Fixed Fill Rate = 90%
• The applied override is calculated by taking the maximum of the minimums and the minimum of the maximums, with the maximum having priority over the minimum
◦ Fixed ROP of 60 will set an effective minimum and maximum of 60
◦ Fixed Fill Rate will set an effective minimum and maximum ROP of -1
▪ With the 0 forecast a ROP of -1 will give 100% fill rate
◦ The ROP will be -1, as the minimum of the maximum is -1 and that takes priority over the maximum of minimums being 60
• With two fixed overrides the system will only achieve one. For any SKU with multiple fixed overrides , the intent of the fixed overrides should be questioned.
◦ For instance, maybe the desired result was a minimum 90% Fill Rate with a minimum ROP of 60
▪ In this case the answer would be a ROP of 60
◦ Or, maybe the desired result was minimum 90% Fill Rate with a maximum ROP of 60
▪ In this case the answer would be a ROP of -1
• Be very careful with fixed Fill Rate and fixed days of supply overrides. In many cases these really should be a minimum or maximum override
 | A fixed Fill Rate or a maximum Fill Rate or days of supply override along with a 0 forecast will set the ROP = -1 |
Example 3 — Overrides and Constraints
For a SKU with an optimal ROP = 1
• SKU Override of Maximum ROP = 5
• SKU Constraint of Minimum ROP = 10
These are the processing steps that take place:
1. The Inventory Optimization calculation sets the ROP = 1,
2. The SKU Constraint sets the ROP = 10
3. The SKU Override sets the ROP = 5
Remove the SKU Constraint and the Inventory Optimization calculation sets the ROP =1 and the SKU Override will do nothing, leaving ROP = 1.
Example 4 — Stock Maximum, ROP, and EOQ
If there is an effective Minimum Stock Maximum (Set using a Fixed or Minimum Stock Maximum) and effective Max ROP (Set using Fixed or Maximum ROP) the effective EOQ is Effective Minimum Stock Maximum – Effective Maximum ROP
• SKU with Fixed ROP and Stock Maximum
◦ Fixed Stock Maximum = 10
◦ Fixed ROP = 5
◦ This sets both the ROP and Stock Maximum and the calculation will use EOQ = 5
• SKU with Minimum ROP and Stock Maximum (assume an optimal ROP = 1 and EOQ = 1)
◦ Minimum Stock Maximum = 10
◦ Maximum ROP = 5
◦ This sets both the ROP = 5 and Stock Maximum = 10 and the calculation will use EOQ = 5
• SKU with Minimum ROP and Stock Maximum (assume an optimal ROP = 6 and EOQ = 1)
◦ Minimum Stock Maximum = 10
◦ Minimum ROP = 5
◦ This sets both the Stock Maximum = 10, ROP = 9, and EOQ = 1
• SKU with Minimum ROP and Stock Maximum (assume an optimal ROP = 6 and EOQ = 3)
◦ Maximum Stock Maximum = 10
◦ Minimum ROP = 5
◦ This sets both the Stock Maximum = 8, ROP = 5 and EOQ = 3
The Minimum ROP sets the ROP = 5, with the EOQ = 3, Stock Maximum = 8 and under the Maximum Stock Maximum = 10.
• SKU with Minimum ROP and Stock Maximum (assume an optimal ROP = 4 and EOQ = 3)
◦ Maximum Stock Maximum = 6
◦ Minimum ROP = 5
◦ This sets both the Stock Maximum = 6, ROP = 3 and EOQ = 3
The Minimum ROP sets the ROP = 5, with the EOQ = 3, Stock Maximum = 8 and violates the Maximum Stock Maximum = 6. This sets the Maximum Stock Maximum = 6 and ROP = 3
• SKU with Fixed ROP and Fixed EOQ
◦ Fixed ROP = 15
◦ Fixed EOQ = 10
◦ This sets ROP = 15, EOQ = 10, and Stock Maximum = 25
• SKU with Fixed Stock Maximum and Fixed EOQ
◦ Fixed Stock Maximum = 15
◦ Fixed EOQ = 10
◦ This sets ROP = 5, EOQ = 10, and Stock Maximum = 15
• SKU with Maximum Stock Maximum, Minimum ROP, and Fixed EOQ
◦ Minimum ROP = 5
◦ Maximum Stock Maximum = 25
◦ Fixed EOQ = 24
◦ This sets ROP = 5, EOQ = 20, and Stock Maximum = 25
The combination of ROP and Stock Maximum drive the EOQ down to 20
• SKU with Minimum Stock Maximum, Minimum ROP, and fixed EOQ
◦ Minimum ROP = 5
◦ Minimum Stock Maximum = 25
◦ Fixed EOQ = 5
◦ This will set ROP = 20, EOQ = 5, and Stock Maximum = 25
The Minimum Stock Maximum drives the value and then with the EOQ = 5, ROP = 20
• SKU with Minimum Stock Maximum, Minimum ROP, and Fixed EOQ
◦ Maximum ROP = 5
◦ Minimum Stock Maximum = 25
◦ Fixed EOQ = 5
◦ This will set ROP = 5, EOQ = 5 and Stock Maximum = 10
The Maximum has priority over the Minimum, so the Maximum ROP = 5 drives the value, the EOQ = 5 then drives Stock Maximum = 10
Example 5 — Mixed Pre-Optimization and Post-Optimization Overrides
• SKU with Fixed Pre-Optimization and Post-Optimization
◦ Pre-Optimization Fixed ROP = 5
◦ Post-Optimization Fixed ROP = 25
◦ This will set ROP = 25
▪ The Post-Optimization will be applied after the Pre-Optimization, therefore ROP = 25
• SKU with Pre-Optimization and Post-Optimization
◦ Pre-Optimization Max ROP = 5
◦ Post-Optimization Min ROP = 25
◦ This will set ROP = 25
▪ The Post-Optimization will be applied after the Pre-Optimization, therefore ROP = 25
• Example SKU with Pre-Optimization and Post-Optimization (assume optimal ROP = 1 )
◦ Post-Optimization Min ROP = 5
◦ Pre-Optimization Max ROP = 25
◦ This will set ROP = 5
▪ The Pre-Optimization will not modify the optimized ROP = 1 and the Post-Optimization minimum of 5 will set ROP = 5
• SKU with Pre-Optimization and Post-Optimization
◦ Pre-Optimization Max ROP = 5
◦ Post-Optimization Min ROP = 25
◦ This will set ROP = 25
▪ The Post-Optimization will be applied after the Pre-Optimization, therefore ROP = 25
• SKU with Minimum Stock Maximum, Minimum ROP and fixed EOQ
◦ Pre-Optimization Maximum ROP = 5
◦ Post-Optimization Minimum Stock Maximum = 25
◦ Fixed EOQ = 5
◦ This will set ROP = 20, EOQ = 5 and Stock Maximum= 25
▪ The Post-Optimization will be applied after the Pre-Optimization, so the Minimum Stock Maximum = 25 drives the value, the EOQ = 5 then drives ROP = 20